California Proposition 86, Cigarette Taxes (2006)
|Voting on Tobacco|
|Not on ballot|
Proposition 86 was intended to increase the tax on cigarettes with revenues from the tax going to various services such as hospital care for children and anti-smoking campaigns.
Text of measure
The ballot title was:
The question on the ballot was:
- "Should the state impose an additional tax of $2.60 per cigarette pack to fund new and expanded health services, health insurance for children, and expanded tobacco use prevention programs?"
The official summary provided to describe Proposition 86 said:
- Imposes additional 13 cent tax on each cigarette distributed ($2.60 per pack), and indirectly increases tax on other tobacco products.
- Provides funding to qualified hospitals for emergency services, nursing education and health insurance to eligible children.
- Revenue also allocated to specified purposes including tobacco-use-prevention programs, enforcement of tobacco-related laws, and research, prevention, treatment of various conditions including cancers (breast, cervical, prostate, colorectal), heart disease, stroke, asthma and obesity.
- Exempts recipient hospitals from antitrust laws in certain circumstances.
- Revenue excluded from appropriation limits and minimum education funding (Proposition 98) calculations.
- See also: Fiscal impact statement
The fiscal estimate provided by the California Legislative Analyst's Office said:
- Increase in new state tobacco excise tax revenues of about $2.1 billion annually by 2007–08, declining slightly annually thereafter. Those revenues would be spent for various health programs, children’s health coverage, and tobacco-related programs.
- Unknown net state costs potentially exceeding $100 million annually after a few years due to provisions simplifying state health program enrollment rules and creating a new pilot program for children’s health coverage.
- Unknown, but potentially significant, savings to the state Medi-Cal Program and counties from a shift of children from other health care coverage to the Healthy Families Program (HFP); potential state costs that could be significant in the long term for ongoing support of expanded HFP enrollment.
- Unknown, but potentially significant, savings in state and local government public health care costs over time due to various factors, including an expected reduction in consumption of tobacco products.
The official voter guide arguments in favor of Proposition 86 were signed by:
- Carolyn Rhee, chair, American Cancer Society (California Division)
- P.K. Shah, M.D., president, American Heart Association (Western States Affiliate)
- Timothy A. Morris, M.D., board member, American Lung Association of California
- Mila Garcia, R.N., member, American Heart Association (Western States Affiliate)
- Willie Goffney, M.D., FACS, president, American Cancer Society (California Division 2006–07)
- Rick Donaldson, Ph.D., RCP, chair, American Lung Association of California
Arguments in favor
The arguments presented in the official voter guide in favor of Proposition 86 were:
- According to the California Department of Health Services, Proposition 86 will "prevent nearly 180,000 deaths due to smoking among California kids now under the age of 17" and "prevent approximately 120,000 additional deaths due to smoking among current California adult smokers who quit smoking."
- The Proposition 86 tax increase will "prevent more than 700,000 kids now under the age of 17 from becoming adult smokers" and "120,000 high school students and 30,000 middle school students would either quit or not start smoking."
- "More than half a million smokers in California would quit smoking."
- "Californians would consume 312 million fewer packs of cigarettes each year."
- Because of these declines in the rate of smoking, "nearly $16.5 billion [would be] saved in healthcare costs."
- State revenues would be increased "by over $2.2 billion per year."
$16,607,128 was contributed to the campaign in favor of a "yes" vote on Proposition 86.
Donors of $100,000 or more were:
|California Association of Hospitals and Health Systems||$10,894,364|
|American Cancer Society||$1,395,462|
|American Cancer Society (California division)||$1,375,853|
|American Heart Association||$1,079,281|
|Tobacco-Free Kids Action Fund||$502,131|
|American Lung Association of California||$233,587|
|California Primary Care Association||$144,361|
|St. Francis Medical Center||$133,846|
The official voter guide arguments opposing Proposition 86 were signed by:
- Larry McCarthy, president, California Taxpayers Association
- James G. Knight, M.D., past president, San Diego County Medical Society
- Steven Remige, president, Association for Los Angeles Deputy Sheriffs
- Monoica Weisbrich, RN, an operating room nurse
- Jaime Rojas, president, California Hispanic Chambers of Commerce
- Malcolm Simpson, a public school teacher
The arguments presented in the official voter guide opposing Proposition 86 were:
- "We all want to improve our healthcare system, but Proposition 86 is the wrong solution. Proposition 86 is an unfair tax increase supported by special interests who are amending our Constitution to benefit themselves."
- "Proposition 86’s proponents say it’s about encouraging people not to smoke, but it isn’t. It’s really a money grab by huge hospital corporations who will reap hundreds of millions of taxpayer dollars each year!"
- "Less than 10% of the tax revenues go toward helping smokers quit or keeping kids from starting."
- "The largest share—almost 40%—goes to hospitals, many of which are funding the campaign for the new tax."
- "HMOs will pocket millions from Proposition 86."
- "Hospitals wrote Proposition 86 to give themselves an exemption to antitrust laws, giving them legal protection to divvy up and limit many medical services, and then raise prices without worrying about competition."
- "Proposition 86 contains 38 pages of spending mandates. But experts agree that the amount of money raised by this tobacco tax will decline over time. Declining revenues and demands to fund Proposition 86’s programs will only worsen our deficit. Other important programs like education, transportation, and law enforcement might have to be cut, or taxes raised further."
- "Law enforcement groups oppose Proposition 86 because it will increase crime and smuggling. Stolen and smuggled cigarettes are already a big source of money for gangs and organized crime. If Proposition 86 passes, a single truckload of stolen cigarettes could be worth over $2 million to criminals."
- "Proposition 86 taxes smokers to pay for programs that have nothing to do with smoking, like obesity programs. Less than 10% of the tax revenues go toward helping smokers quit or keeping kids from starting."
- "Proposition 86 amends our Constitution and statutes. When problems and abuses are discovered, it will be nearly impossible for the Governor or the Legislature to fix them. The Constitution should not be changed for a special interest money-grab."
$66,682,899 was contributed to the campaign in favor of a "no" vote on Proposition 86.
Donors of $500,000 or more were:
|U.S. Smokeless Tobacco||$2,646,806|
|Cigar Association of America||$1,000,000|
Path to the ballot
- See also: California signature requirements
As an initiated constitutional amendment, 598,105 valid signatures were required to qualify Proposition 86 for the ballot.
- Official California Voter Pamphlet information about Proposition 86
- PDF of the mailed November 7, 2006 voter guide for Proposition 86
- Proposition 86 in the Smart Voter Guide
- Analysis of Proposition 86 from the Institute of Governmental Studies
- Guide to Proposition 86 from the California Voter Foundation
- Summary of donors to and against 86 from Cal-Access
- Donors for and against Proposition 86 from Follow The Money
- Official declaration of the November 7, 2006 results on ballot propositions
- Orange County Register, "Proposition 86 a tax increase nonstarter", August 18, 2006
- Robert A. Levy, Cato Institute, "High tobacco taxes won't make the problem go away", March 20, 1999