PE: Taxes to Burn? Prop. 86 would pound the state budget by expanding countless programs


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October 22, 2006

Of all the special tax measures on the ballot, none may be more devious than Prop. 86, the tobacco-tax measure. The special interests behind this 300 percent tax increase want voters to believe it’s all about reducing smoking.

In reality – this tax, targeted at an unpopular minority of Californians – is really about generating money for more wasteful government spending on an endless list of pet programs, with taxpayers paying the ultimate bill.

This list of programs includes such gems as obesity education, nurse training and even repayment of physicians’ medical school loans. What exactly do these things have to do with smoking? Prop. 86 proponents prefer you don’t ask that question.

The biggest winner will be California hospitals, which will receive the largest share of the more than $2 billion estimated to be generated by the new tax. Hospitals will receive 40 percent of the funds, which amounts to nearly $800 million per year. The money is supposed to be used for reimbursing hospitals for providing emergency care to the uninsured.

The other big winners will be fans of government health insurance. Prop. 86 sets aside hundreds of millions of dollars to extend health insurance to the state’s uninsured children. While the welfare of California’s children should always be a top priority, the Prop. 86 approach can’t and won’t work.

Regardless of how the public feels about a more bloated state bureaucracy to implement this expanded health-insurance program, Prop. 86 would not generate enough money in the long term to pay for it. Anyone that looks at smoking rates can see that tobacco use is declining. Declining tobacco use means fewer cigarette purchases, and fewer purchases means less tax money.

For those keeping score at home, this means Prop. 86 proposes to pay for an ever-expanding public-health program with a declining source of revenue. When the tax revenue dips below the financial demands of the programs, will state bureaucrats call it a day and shelve the program? Of course not.

They will be in front of state lawmakers and the governor demanding to be fully funded with the money they were promised from Prop. 86. With our ongoing budget problems, lawmakers are going to have a hard time finding enough loose change in the couch cushions to pay for expanded insurance and the two dozen other health programs funded by Prop. 86.

Where’s the money going to come from? In the end, everyone in California will be footing the bill, including those who thought they were going to get something for nothing under Prop. 86. After all, aren’t the smokers supposed to be the ones financing these programs?

Speaking of those much-maligned smokers, it’s clear that Prop. 86 backers care more about smokers’ pocketbooks than their health. While taking 60 percent of the pie for hospitals and health insurance, drafters of Prop. 86 have set aside a measly 10 percent of the money for smoking prevention and cessation programs.

For its arguably commendable aims, Prop. 86 is no different than past attempts to make budgeting decisions via the ballot box. And once again, those behind the measure would guarantee their own funding while other worthy public programs must annually fight for table scraps as part of the budget process. Voters should reject Prop. 86.

Chris Mann is the president of the Inland Empire Taxpayers Association.