Bureaucracy-Building Efforts May Doom California Cigarette Tax Increase Initiative

On Tuesday California primary voters (if they even bother to show up) will get to choose between letting smokers keep some of their nicotine-stained dollars or snatching them away to fund more cancer research.

Proposition 29 would add a tax of $1 per pack of cigarettes in California (current tax: 87 cents per pack). The revenue from the taxes would fund cancer research, smoking reduction programs and tobacco law enforcement. The state's Legislative Analyst's Office predicted the ballot initiative would bring in $735 million in revenue annually. (Do keep in mind the state's record of grossly overestimating in its revenue projections. This number has already been reduced once.)

The ballot initiative garnered significant support back in March – 67 percent supported the measure, according to a poll by the Public Policy Institute of California [pdf]. But by May the support had plunged 14 points to 53 percent. Many prominent California newspapers have editorialized against it, including the Los Angeles Times. And when you can't get a paternalistic do-gooder tax increase past the editorial board of the Times, you've definitely done something wrong somewhere.

In this case, a huge television advertising campaign has alerted Californians to the reality of the proposition: It doesn't "fund cancer research" in some coherent, observable outlay. It creates yet another state bureaucracy to oversee the fund's expenditures full of appointees with no oversight. Part of the outlays would go to facilities and other capital expenses. And, of course, a significant amount would go to various "tobacco law enforcement" efforts, which is code for government employee salaries (and likely grants for overtime for special "enforcement" projects). It also doesn't require the money to even be spent for research taking place within California, a detail being hit again and again in ads given the state's still double-digit unemployment numbers.

 

After La Donna Porter appeared in the ad above opposing the proposition, Gov. Jerry Brown booted her off a state advisory panel that examines chemicals that cause developmental or reproductive harm.

Tobacco companies have spent millions in opposition to the measure, but the messages are coming from anti-tax groups as well as skeptical media outlets. The message tends to be "the money would be better spent elsewhere" rather than "we need to be spending less money." If only we were spending it on college students or the poor, the Times laments:

"Proposition 29 is well intentioned, but it just doesn't make sense for the state to get into the medical research business to the tune of half a billion dollars a year when it has so many other important unmet needs. California can't afford to retain its K-12 teachers, keep all its parks open, give public college students the courses they need to earn a degree or provide adequate home health aides for the infirm or medical care for the poor. If the state is going to raise a new $735 million, it should put the money in the general fund rather than dedicating it to an already well-funded research effort."

So if the money were being used to bankroll public employee pensions or to keep parks open (whatever that actually means (bankrolling park employee pensions)) rather than to fund cancer research, it would be okay.

Earlier this month, I blogged other examples where revenue California is gathering isn't going where people think it's going.