California Proposition 10, "First 5" Early Childhood Cigarette Tax (1998)
Proposition 10 imposed additional tax on cigarettes of 50 cents/pack, as well as additional taxes on other tobacco products. With the revenue from those taxes, the state government created state and county commissions to establish early childhood development and smoking prevention programs. These are known as First 5 agencies.
Proposition 10 won narrowly after a hard-fought campaign where its unsuccessful opponents spent about $30 million to defeat it versus the slightly less than $10 million spent by its supporters.
As of 2009, Proposition 10 was generating about $500 million a year in taxes.
Lack of accountability asserted
A December 2009 report focusing on the First 5 program in Fresno County said, "Actor/Director Rob Reiner and his supporters cited accountability as a reason California voters should support a tobacco tax for early childhood initiatives in 1998. Annual reports would document whether or not the programs helped children, they said. But more than a decade after voters approved the tax, agencies that run those programs in Fresno County and other areas are still struggling to find out how effective they are."
First 5 Fresno County has spent about $140 million since it was established in the wake of Proposition 10's enactment. The agency has spent more than $5 million to hire five different consulting firms to evaluate the program's performance.
Roseann Hogan, hired to evaluate the Fresno First 5 program for 2006-07, said that a survey of the parental behavior of more than 400 parents receiving First 5 services found that those parents receiving the most services showed the least improvement in their nurturing skills.
In 2007, Hogan also investigated the effectiveness of First 5 school readiness programs by developing detailed profiles of about 600 kindergarten students, including 44 who had previously gone through a First 5 program. Her report concluded that the children who received the most services from the First 5 program experienced the lowest level of improvement in their reading readiness scores over time.
In Fresno County, the First 5 program pays an average of $225 for private contractors for home visits. In home visits, the service deliverers are supposed to provide health, education and social skill training to children and parents.
Evaluator Hogan's contract to evaluate the program was severed in late 2008. She says her contract was terminated because her reports were distasteful to those running the program; those running the program disagreed. At the same time, there has been so much turnover, in general, in the ranks of those retained to evaluate Fresno County's First 5 program that the program has determined that developing a "long-term relationship with a highly qualified external evaluator is critical." The turn-over rate in the Fresno program is about twice what it is in First 5 programs in 19 other counties.
Change proposed in 2009
California state budget problems in 2009 led to the California State Legislature putting California Proposition 1D (May 2009) on the ballot. Proposition 1D failed, but if it had passed, it would have taken some of the funds that under Proposition 10 are devoted to early childhood education and put those funds into the state's unrestricted general fund.
Change proposed in 2011
In early March 2011, the California State Legislature was expected to vote on a budget that would take $1 billion from Proposition 10 funds and, instead of having that money go to the early childhood programs Proposition 10 supports, have the money go to Medi-Cal's healthcare programs for children aged 5 and under.
Proposition 10 funds are divided between 58 county "First Five" commissions and a statewide commission. The 58 county commissions get 80% of the total revenue generated by the Proposition 10 tax, while the state commission receives 20% of the revenue.
The 2011 budget proposal to take $1 billion of Prop 10 funds for Medi-Cal would take $50 million from the state commission and $950 million from the 58 county commissions. The 20 smallest "First Five" county commissions would be excluded from the funding shift. However, under the budget proposal, each of the 38 larger "First Five" county commissions would have until June 30, 2012 to transfer 50% of their fund balances to the state government.
As of the end of 2010, the cumulative balance in the county commission funds stood at $1.9 billion.
Of voters who cast a vote in this election, 612,987 or 7.11% did not cast a vote on Proposition 10.
Other cigarette taxes
- California has had a 12-cent-per-pack tax on cigarettes for several decades. The income from this tax goes into the state's unrestricted general fund.
- California Proposition 99 (1988). This measure added a 25-cent-per-pack tax on cigarettes. The money collected from the Proposition 99 tax goes to fund tobacco-related health education and disease research, hospital care for the indigent, and park and wildlife restoration.
- The federal government taxes each pack of cigarettes sold in California at sixty cents, effective April 2009.
- A California Tobacco Tax for Cancer Research Act (February 2012) is under consideration. This would tax cigarettes at $1.00-per-pack.
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Proposition 10 made these changes to the California Constitution. It:
Text of measure
The ballot title was:
The official ballot summary said:
- Creates state commission to provide information and materials and to formulate guidelines for establishment of comprehensive early childhood development and smoking prevention programs.
- Creates county commissions to develop strategic plans with emphasis on new programs.
- Creates trust fund for these programs. Funding for state and county commissions and programs raised by additional $.50 per pack tax on cigarette distributors and equivalent increase in state tax on distributed tobacco products.
- Funds exempt from Proposition 98 requirement that dedicates portion of general tax revenues to schools.
The official estimate of net state and local government fiscal impact from the California Legislative Analyst's Office was:
- Raises new revenues of approximately $400 million in 1998-99 and $750 million annually thereafter for the California Children and Families First Program, to be allocated primarily to new state and county commissions for early childhood development programs.
- Results in reduced revenues for Proposition 99 health care and resources programs of about $18 million in 1998-99 and $7 million annually thereafter.
- Results in increased state General Fund revenues of about $2 million in 1998-99 and $4 million annually thereafter. Results in increased county General Fund revenues of about $3 million in 1998-99 and $6 million annually thereafter.
- Potential unknown long-term savings in state and local health, education, and other programs.
Supporters of Proposition 10 spent $9,046,683. The top contributors to the campaign to pass Proposition 10 were:
- Stephen Bing: $1,800,000.
- Rob Reiner: $1,447,500
- Ron Burkle: $1,035,000
- Estelle Reiner: $1,025,000
- Haim Saban: $500,000
- American Cancer Society: $544,330
- Jerry Perenchio: $350,000
- Forum for Early Childhood Development: $295,000
- Michael Huffington: $109,087
- National Center for Tobacco Free Kids: $100,000
- Steven Spielberg: $100,000
- Richard Scruggs: $100,000
Opponents of Proposition 10 spent $29,783,512. Top contributors to the effort to defeat Proposition 10 were:
- Phillip Morris: $20,967,557
- Brown & Williamson: $5,039,056
- Lorillard Tobacco: $2,835,489
- R.J. Reynolds Tobacco: $738,024
- U.S. Tobacco Company: $294,485
- Tobacco Institute PAC: $236,600
- Brown & Williamson Employee PAC: $140,000
- RJR Nabisco: $50,000