TAXING HABIT

Smokers in California may have an even more expensive habit come Jan. 1, 2007. If groups backing the Children's Health Initiative can gather enough signatures in the next few weeks, voters will decide in November whether a $2.60 tax should be included in the price of each pack of cigarettes.

Supporters of the initiative say the tax would raise $2.27 billion annually, the majority of which would go to healthcare: $405 million for children's health insurance and $828 million for hospital emergency services. There's also money earmarked for prevention and treatment of tobacco-related diseases, nursing education and training, community clinics and school-readiness programs for kids.

It's the health-insurance portion of the bill that the initiative's authors most want voters to consider.

“People are sympathetic,” when it comes to healthcare for children, said Rebecca Stark, PICO California program coordinator. “People can rally around this issue, because children are innocent. It's not just a strategic decision,” she said. “It's a decision of the heart. Kids deserve health care.”

PICO (People Improving Communities through Organizing), a network of faith-based community organizations, has been working on healthcare issues such as this for years, said Stark. It was involved in creating a similar initiative in Santa Clara County five years ago, and nine other counties have followed suit. If successful, the statewide program funded by the cigarette tax would cover kids not eligible for other health-insurance programs and make it easier for parents to sign their kids up for state-funded health insurance. Right now, roughly 1 million California kids are uninsured. Most of these are children of immigrant parents for whom the tangled bureaucracy of existing state-funded healthcare programs is an access barrier.

Along with groups like the American Lung Association and American Cancer Society, PICO proposed a $1.50-per-pack tax last year. It wasn't the only group, however; the California Hospital Association had its own initiative, with more money earmarked for private hospitals. The two groups ultimately decided to team up, and the proposed tax went up to $2.60. The money for private hospitals was also removed from the proposal, making the initiative potentially more attractive to voters, said Andy Sobel of the San Diego Organizing Project, a PICO affiliate.

“The model works,” said Sobel, referring to the Santa Clara County program. “We did a survey and realized about 70,000 kids in Santa Clara were uninsured, and about 80 percent of their parents were employed. Parents were missing out on work when their kids got sick, so this affects society, not just the uninsured.” The Santa Clara Children's Health Initiative organization claims to have enrolled 107,380 children in insurance programs.

But not everyone thinks the tax is a good idea. “First of all, the revenue projections are poppycock,” said Richard Rider, chair of the San Diego Tax Fighters Association. “It assumes the same number of [packs of] cigarettes will be sold, and people will vote thinking a certain amount of money will be received, but these projections are false.

“The assumption is we need more money, but California is awash in revenues,” Rider said. “Taxes are rising, and our revenues have risen 43 percent over the last six years. State revenues are pouring in to pay [salaries] that [are] above the private-sector pay. Right now the state budget is designed to benefit those that create it.”

Rider, a non-smoker, says targeting smokers is unfair. “This is going to impact minorities, Mexicans and poor people,” he said. “If you look at who smokes, it's not the middle class.... It's a huge mistake to levy this kind of tax in the guise of helping people.” He said it's easier for lawmakers to target low-income groups and minorities. Smokers, Rider said, are a new minority.

The last time California voters were asked to approve a cigarette-tax increase was in 1998 with Proposition 10. Despite heavy opposition from tobacco companies, the measure passed, raising California's cigarette tax from 37 cents per pack to 87 cents. The additional revenue went to fund social-service programs and anti-smoking campaigns.

If the Children's Health Initiative passes, California would have the highest cigarette tax in the U.S., a distinction right now held by New Jersey. California's cigarette tax is currently below the national average, Stark said. “Our central focus is protecting kids, but we've learned that every time tobacco tax increases, smoking goes down,” she pointed out. “So it's a worthy issue.”

Last year, two bills to provide healthcare for uninsured kids were vetoed by Gov. Arnold Schwarzenegger. The bills, AB 772 and AB 1199, would have opened up state health insurance programs to more children from low- and middle-income families and also created the California Healthy Kids Fund to manage private and public money earmarked for children's healthcare. Though the governor said he supported the idea of the bills, he vetoed them because of funding concerns.

Sobel says the coalition working on the cigarette tax will start gathering signatures from registered voters on Feb. 11. They'll need 120,000 valid signatures to qualify for the November ballot. “Now we have hospitals and groups like American Cancer Society and American Lung Association on board, which are some heavy hitters,” said Sobel. “It's looking pretty good that we'll get it on the ballot.”

Sobel says the initiative's biggest opponent will likely be the tobacco industry. Phillip Morris spokesman Bill Phelps told CityBeat the tax was “excessive” and said it may have unintended consequences including smuggling and counterfeit cigarette sales. Rider, too, speculated that if a tax like this passes, a new class of criminals would crowd the already overburdened prison system. The crime of smuggling cigarettes across state lines, Rider said, would be inevitable.