California Proposition 29, Tobacco Tax for Cancer Research Act (June 2012)

Proposition 29
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Type:	State statute
Referred by:	"Californians for a Cure"
Topic:	Tobacco
Status:	On the ballot

California Proposition 29, the Tobacco Tax for Cancer Research Act is on the June 5, 2012 presidential primary ballot in California as an initiated state statute.

If Proposition 29 is approved by California's voters, the tax on cigarettes in the state will increase by $1.00 per pack. California’s current cigarette tax is 87 cents per pack. The total tax per pack of cigarettes, if Proposition 29 passes, will be $1.87/pack. The additional tax revenue will be used to fund cancer research, smoking reduction programs, and tobacco law enforcement.

Proposition 29 would generate about $735 million a year in new tax revenues, according to a 2012 report by the California Legislative Analyst's Office. In 2011 the Legislative Analyst's Office had projected the revenue to be at $850 million a year, but later updated that analysis.

The last time a cigarette tax was on the California ballot was in 2006, when Proposition 86 was narrowly defeated. Proposition 86 would have imposed an additional tax of $2.60 per pack of cigarettes.

Election date

The election on Proposition 29 will take place on June 5, 2012.

The initiative originally qualified for the February 5, 2012 ballot. In early 2011, there was a widespread belief that Jerry Brown would qualify a Tax Increase Proposition for the June or November 2011 ballot. If that had happened, the cigarette tax measure would have been moved onto that 2011 ballot. As a result, supports and opponents of the cigarette tax initiative sprang into action, launching various campaign tactics.

Around the time it became clear that there would be no 2011 ballot proposition election, the California State Legislature also voted to terminate the February 5, 2012 election date. This moved the cigarette tax initiative to the June 5, 2012 ballot.

On October 7, 2011, Gov. Brown signed Senate Bill 202. SB 202 prohibits holding ballot proposition elections during June primaries. However, it applies only to ballot propositions that qualify on or after the date SB202 was signed. Thus, the vote on the California Cancer Research Act remains June 5, 2012.

Text of measure

See also: Ballot titles, summaries and fiscal statements for California's 2012 ballot propositions

Title

The ballot title is:

Imposes Additional Tax on Cigarettes for Cancer Research. Initiative Statute.

Official summary

The official summary provided by the Attorney General of California's office to describe the initiative says:

"Imposes additional five cent tax on each cigarette distributed ($1.00 per pack), and an equivalent tax increase on other tobacco products, to fund cancer research and other specified purposes. Requires tax revenues be deposited into a special fund to finance research and research facilities focused on detecting, preventing, treating, and curing cancer, heart disease, emphysema, and other tobacco-related diseases, and to finance prevention programs. Creates nine-member committee charged with administering the fund."

Fiscal impact

See also: Fiscal impact statement

The fiscal estimate provided by the California Legislative Analyst's Office says:

"Increase in new cigarette tax revenues of about $855 million annually by 2011- 12, declining slightly annually thereafter, for various health research and tobacco-related programs. Increase of about $45 million annually to existing health, natural resources, and research programs funded by existing tobacco taxes. Increase in state and local sales taxes of about $32 million annually."

Details

See also: Text of California Proposition 29 (June 2012)

New taxes

The proposed initiative would:

• Levy an excise tax on every distributor of cigarettes at the rate of fifty mills for each cigarette sold.
• Levy a floor stock tax on every cigarette dealer or wholesaler for each cigarette in his or her possession at the rate of fifty mills for each cigarette.

Use of revenue

Revenue raised by the initiative would be spent as follows, according to the California Legislative Analyst's Office:

• Approximately $75 million annually would maintain existing tobacco tax revenue streams. The objective here is avoid negatively impacting other revenue streams from other cigarette taxes such as from Proposition 99 (1988) and Proposition 10 (1998).

• 60% (approximately $468 million annually) would to go research of cancer and tobacco-related disease "for the purpose of grants and loans to support research into the prevention, early detection, treatments, complementary treatments and potential cures of lung cancer and other types of cancer, cardiovascular disease, emphysema and other tobacco related diseases, including but not limited to coronary heart disease, and chronic obstructive lung disease".

• 15% (approximately $117 million annually) would go to facilities and capital equipment for research "for the purposes of grants and loans to provide facilities, including but not limited to those building, building leases and capital equipment as my be found necessary and appropriate by the Committee, to further biomedical ,epidemiological, behavioral, health services, and other research whose primary focus is to identify and refine promising prevention, early detection, treatments, complementary treatments, rehabilitation and potential cures of lung cancer an other types of cancer, cardiovascular disease, emphysema and other tobacco related diseases".

• 20% (approximately $156 million annually) would go to tobacco prevention and cessation to the state’s existing tobacco control program. These funds would be divided between the California Department of Public Health (80%) and the California Department of Education (20%) for their existing programs to prevent and reduce the use of tobacco.

• 3% (approximately $ 23 million annually) would go to tobacco law enforcement "to support law enforcement efforts to reduce cigarette smuggling, tobacco tax evasion, and counterfeit tobacco products, to reduce illegal sales of tobacco products to minors, and to enforce legal settlement provisions and conduct law enforcement training and technical assistance activities for tobacco related statues".

• No more than 2% (approximately $16 million annually) would go to administration, including the collection, auditing, and distribution of revenue.

Governing committee

The initiative would create a 9-member governing committee charged with administering the fund. The California Cancer Research Act Oversight Committee would be composed of:

• 3 University of California chancellors (Berkeley, San Francisco and Santa Cruz)
• 3 "selected from among Cancer Center Directors of National Cancer Institute designated cancer centers located within the State of California" (appointed by the Governor of California)
• 1 "affiliated with a California Academic Medical Center who is a practicing physician with expertise in the prevention, treatment or research of cardiovascular disease" (appointed by the Governor of California)
• 2 "selected from among California representatives of California or national disease advocacy groups whose focus is tobacco-related illness, at least one of whom shall be a person who has been treated for a tobacco related illness." (appointed by Director of California Department of Public Health)
• A Committee to establish a peer review process for selection of grants modeled on the process used by the National Institutes of Health.

Support

Facebook logo of the "Yes on 29" campaign

Supporters

A coalition, "Californians for a Cure", was formed to campaign in support of the measure. This campaign is co-chaired by two cancer survivors: the 7-time Tour de France winner Lance Armstrong, and retired President pro Tempore of the California State Senate, Don Perata. Perata authored the measure.

The campaign’s steering committee also includes the American Cancer Society, American Lung Association in California, American Heart Association, American Stroke Association, Lance Armstrong Foundation, Laura Ziskin (co-founder of Stand Up To Cancer), Campaign for Tobacco-Free Kids, and several surgeons and directors of California cancer research institutions including Nobel Laureate Dr Elizabeth Blackburn and Congressional Gold Medal Nominee Dr Balazs Bodai. Tom Torlakson, the California Superintendent of Public Instruction, is also a supporter.

Oakland City Councilmember Ignacio De La Fuente received a $25,000 consulting fee in August 2009 from "Hope 2010", a ballot measure committee controlled by the supporting campaign's co-chairman, Don Perata. He was tasked with "contacting 10 labor groups for petition signatures and 10 business groups for campaign contributions in the Sacramento and Oakland areas."

Arguments in favor

Arguments that have been made in favor of the initiative include:

• It will help groups such as the National Cancer Institute, which has a dwindling budget.

• Joe Debbs of the American Heart Association says, "It's this simple: A no vote on Proposition 29 supports tobacco companies' strategy of singling out poor people and people of color for addiction and death. A yes vote on Proposition 29 is a vote for better health and live saving research. From our perspective there is no middle ground. You're either with us, or you buy big tobacco's lies."

• Jim Knox, a spokesperson for the American Cancer Society, says, "Using tobacco taxes to pay for cancer research makes sense. Tobacco use causes cancer. The connection is very direct."

• It will help California's economy, according to Stanton A. Glantz, a professor of medicine at the University of California-San Francisco. He says, "The $1 cigarette tax increase, combined with 20 cents allocated to reinvigorating California’s anti-smoking program, will help so many people quit smoking that they’ll spend a billion dollars less a year on cigarettes. And $800 million of that billion which is now being sent out of state to Philip Morris, RJ Reynolds and other tobacco interests will stay here in California creating almost $2 billion in new economic activity and 12,000 new jobs."

Donors

Approximately $4.6 million has been contributed to the campaign for a "yes" vote on Proposition 29, as of April 21, 2012.

Three campaign committees have registered with Cal-Access as supporters of Proposition 29. They are:

• Californians for a Cure, sponsored by the American Cancer Society California Division, Inc., American Lung Association in California, American Heart Association & Cancer Research Doctors
• The American Cancer Society Cancer Action Network California Ballot Issue Committee
• The Hope 2010 Cure Cancer (Perata Ballot Measure Committee)

On February 15, Lance Armstrong announced that his Texas-based foundation would give a $1.5 million contribution to the "Yes on 29" committee.

These are the main donors to the Proposition 29 campaign as of April 21, 2012:

Donor	Amount
American Cancer Society	$1,578,278
Lance Armstrong Foundation	$1,500,000
American Heart Association	$529,454
American Lung Association	$394,436
Volunteers Organized for Community Empowerment	$152,188
Tobacco-Free Kids Action Fund	$50,000
University of California/San Francisco Foundation	$50,000
T. Gary Rogers	$25,000
Cedars-Sinai Medical Center	$25,000
National Dialogue on Cancer Foundation	$15,000
The Don Perata 2004 campaign fund	$13,504

Paid consultants

See also: Vendors and consultants to California's 2012 ballot proposition campaigns

Political consultants who have provided paid services to the "Yes on 29" campaign include:

• Olson, Hagel & Fishburn: $187,028 (through March 2012)
• Tramutola Advisors: $70,425 (through March 2012)

Opposition

Website logo of the "No on 29" campaign

Opponents

• A coalition, Californians Against Out-of-Control Taxes & Spending, was formed to oppose the measure.

• Tobacco companies R.J. Reynolds and Philip Morris oppose the measure.

• The California Taxpayers Association, the Howard Jarvis Taxpayers Association, FreedomWorks and Americans for Prosperity oppose Proposition 29.

• The California Republican Party voted to oppose Proposition 29.

• Grover Norquist of Americans for Tax Reform.

Arguments against

Arguments that have been made against Proposition 29 include:

• Proposition 29 is a "poorly written, fundamentally flawed special-interest tax measure".

• It is an example of ballot-box budgeting: "Unfortunately, it is another example of ballot box budgeting in which revenues are limited for specific purposes with little oversight from outside agencies."

• "As with other ballot box funding mechanisms, the legislature would not be able to touch the money despite other needs in the state."

• Teresa Casazza of the California Taxpayers Association says, "There's no doubt that we all support cancer research. But like high-speed rail, stem-cell research and other ballot-box budget initiatives before it, Proposition 29's good intentions are overshadowed by the fact that California simply cannot afford another billion-dollar government boondoggle to create another wasteful spending program."

• Mark Paul, a former deputy state treasurer, argues that the state has more urgent financial needs: "Like many initiatives, this plays to people's emotions. Who likes cancer? Nobody does. But when we're raising tuition at universities and shortening the … school year and shutting down core services, is this where we should be spending our money?"

• David Kline, a spokesperson for the California Taxpayers Association, says, "We don’t think it makes sense to create a new body of political appointees to oversee this money when the money coming in simply won’t be enough to keep the program going. The fact that they are all political appointees raises the issue of whether there will be more politics involved than hard science or real budgetary expertise."

• Jay McKeeman of the California Independent Oil Marketers Association says, "While the goals of the proposition may be laudable, we believe state funding for such purposes should be integrated into the overall needs of the state and balanced with other important priorities. This proposition does not provide for that ability; it dictates revenue use without other important considerations."

• David Williams of the Taxpayers Protection Alliance says, "... the additional revenue will be used to expand an already bloated bureaucracy and do nothing to help the state out of its financial mess. The federal government already spends $6 billion a year on cancer research and any research on a serious disease like cancer should be coordinated at the national level rather than a patchwork of research done at the state level."

• Reed Royalty, the president of the Orange County Taxpayers Association, says, "Even worse for California taxpayers, Prop. 29 doesn't require the tax revenue to be spent in California. Tax dollars raised under the measure could go out of state or even out of the country. Our state faces an unemployment rate of 10.9 percent, one of the highest in the nation. Funding for schools and other critical services has been cut by billions, and we have long-term debt of more than $200 billion. California tax dollars should stay in California to help create jobs here, not to create jobs in other states and countries, as Prop. 29 allows."

• Debra Saunders: "I cannot help but look at Prop. 29 and wonder: If raising state cigarette taxes should reduce smoking all by itself, why not put the new money in the state's cash-starved general fund? When Sacramento has to implement further cuts or new taxes to fill a gaping hole, why did Prop. 29's authors insist on raising money to bankroll their preferred programs?"

Donors

Approximately $23.8 million has been contributed to the campaign for a "no" vote on Proposition 29 as of April 21, 2012.,

Two campaign committees have been established to support the campaign urging a "no" vote. They are called:

• "Californians Against Out-of-Control Taxes and Spending, Major Funding by Philip Morris USA and UST LLC, with a Coalition of Taxpayers, Small Businesses, Law Enforcement and Labor."
• California Citizens Against Wasteful Taxes - No on Prop 29

The largest donors to either or both of these committees, and their donation levels, are:

Donor	Amount
Altria/Philip Morris	$14,662,493
R.J. Reynolds	$5,563,433
U.S. Smokeless Tobacco (Altria)	$1,617,980
American Snuff Company (a Reynolds division)	$875,000
Santa Fe Natural Tobacco Company (a Reynolds division)	$574,000
John Middleton Co. (via Altria), an affiliate of Philip Morris	$392,384
International Premium Cigar & Pipe Retailers	$40,000
Trepco West	$5,200
Prometheus International	$2,500
Core-Mark	$1,965
Santa Barbara Cigar & Tobacco	$1,000

In 2006, about $66 million was spent to successfully defeat Proposition 86, which would have imposed an additional tax of $2.60 per cigarette pack to fund various health programs and tobacco use prevention programs.

Projected impact

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Health

In a study conducted by the measure's supporters to estimate the potential impact of the proposed initiative on smoking rates, it is argued that the new tobacco tax would lead to:

• A 13.7% decrease in youth smoking;
• 228,700 fewer California kids from becoming addicted adult smokers;
• 118,300 adult smokers in California who would quit;
• Avoiding 22,300 Smoking-affected births over next five years;
• Save 104,500 California residents from premature smoking-caused death;
• $37.9 million in 5-year health savings from fewer smoking-affected pregnancies & births;
• $43 million in 5-year health savings from fewer smoking-caused heart attacks & strokes;
• $5.1 billion in long-term health savings in the state from adult & youth smoking declines.

Fiscal impact

The California Cancer Research Act was amended in early December 2009 so that it would not financially impair existing tax revenues, through adding a provision that will maintain existing tobacco tax revenue streams so that Proposition 99 (1988), California Proposition 10 (1998), and general fund and breast cancer programs funded by existing tobacco taxes are not negatively impacted by the projected reduction in cigarette sales from the proposed cigarette tax increase.

The amendment was a response to an initial report by the California Legislative Analysts’ Office, which estimated that funding for California's First 5 Early Childhood Program California Proposition 10 (1998) would lose about $45 million per year if the measure was enacted because of the resulting reduction in the number of smokers in California. It caused Chad Griffin, President of the American Foundation for Equal Rights, to speculate that some traditionally friendly advocates might oppose the measure: "Unless this is corrected, and hopefully this was a mistaken omission and can be refilled quickly ... I think you'd see a wide coalition of people including Rob Reiner and children's health and education groups across the state actively opposing something that ideally we'd be supporting.”

Stanton Glantz study

Stanton Glantz, director of the Center for Tobacco Control Research and Education at UC San Francisco, released a study about the potential impact of Proposition 29 on February 6, 2012. According to the Glantz study, "It’ll have a direct impact on UC Berkeley and UCSF because there will be a lot of money put into research, and some part of that will be done at the University of California and at UCSF."

Tobacco taxes in California

California’s cigarette tax is currently 87 cents per pack (with an equivalent tax on other types of tobacco products) and is levied on cigarette distributors who supply cigarettes to retail stores.

At $0.87 per pack, California has the 33nd highest (or 17th lowest) tobacco tax in the United States of America. The average state tax on tobacco in the United States is $1.45. California is one of three states (North Dakota and Missouri) in the United States that has not raised tax on tobacco since 1999 or earlier.

The additional $1 levied by the California Cancer Research Act would make California tobacco taxes the 15th highest (or 35th lowest) in the United States.

The total $0.87 per pack tax is made up of the following components:

• $0.6 per pack pursuant to federal government taxes.
• $0.5 per pack pursuant to Proposition 10 (the "First Five" program. This measure supports early childhood development programs.
• $0.25 per pack pursuant to Proposition 99 (1988). Proposition 99 increased cigarette tax by 25 cents per pack, and provided that the tax on other tobacco products be raised commensurately with this and any future tax on cigarettes. These revenues are allocated to tobacco education and prevention efforts, tobacco-related disease research programs, and health care services for low-income uninsured persons, as well as for environmental protection and recreational resources.
• $0.1 per pack for the state General Fund.
• $0.02 per pack enacted through a separate measure approved by the Legislature and Governor in 1993 to create the Breast Cancer Fund, which supports research efforts related to breast cancer and of breast cancer screening programs for uninsured women.

Sales of cigarettes and other tobacco products also are subject to the sales and use tax, which is imposed on their price including excise taxes.

Editorial opinion

See also: Endorsements of California ballot measures, 2012

"Yes on 29"

• The Desert Sun: "On June 5, California voters have a chance to save 104,000 lives. We can prevent 228,000 youngsters from starting to smoke. We can generate $500 million for cancer research. And unless you're among the roughly 12 percent of Californians who smoke, it won't cost you a thing."

• The Sacramento Bee: "...the potential benefits of raising the tobacco tax outweigh the uncertainties posed by Prop. 29 governance. And that's the bottom line. To discourage smoking and save lives, California must again raise the tobacco tax."

• Santa Maria Times: "As we mentioned earlier, we aren’t big fans of budget decisions being made at the ballot box, but the potential to have fewer smokers — and therefore healthier citizens — in California easily trumps our concern about citizens possibly usurping the responsibilities of our elected leaders."

• The Santa Cruz Sentinel: "And here's a significant benefit of raising tobacco taxes: It makes cigarettes and other tobacco products more expensive. Even though slightly fewer than 12 percent of the state's population still smoke, raising the cost makes it less likely young people can afford to purchase cigarettes."

"No on 29"

• The Appeal-Democrat. They say, "[The] projected revenue assumes the new tax doesn't both suppress tobacco use — already at 15 percent in California, the second-lowest level among the states — while expanding black-market traffic in cigarettes. We have a better idea. Nix the taxes — at least until the economy starts growing everywhere, not just along the coasts."

• Los Angeles Times: "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."

Polling information

See also: Polls, 2012 ballot measures

A poll taken in late February 2012 by Public Policy Institute of California showed that a majority of likely voters support Proposition 28.,

Greenberg Quinlan Rosner and American Viewpoint jointly conducted a poll for USC Dornsife/Los Angeles Times poll from March 14-19, 2012.

Date of Poll	Pollster	In favor	Opposed	Undecided	Number polled
February 21-28, 2012	PPIC	67%	30%	3%	2,001
March 14-19, 2012	By GQR & AV for USC Dornsife/LAT	68%	29%	3%	1,500
May 14-20, 2012	PPIC	53%	42%	5%	2,002
May 17-21, 2012	By GQR & AV for USC Dornsife/LAT	62%	33%	5%	1,002
May 21-29, 2012	Field	50%	42%	8%	608

Path to the ballot

See also: California signature requirements

• On September 22, 2009, the law firm of Olson, Hagel & Fishburn filed a request with the Office of the California Attorney General for an official ballot title on the initiative.
• The measure was given an official ballot title on December 17, 2009 with a petition circulation deadline of May 17, 2010.
• Arno Political Consultants was hired to collect the signatures to qualify the measure for the ballot.
• In June 2010, supporters of the measure submitted 633,453 signatures on petitions, versus a requirement of 433,971 signatures.
• On August 24, 2010, the California Secretary of State confirmed that Proposition 29 had qualified for California’s ballot.

A February 2012 analysis of the money spent on petition signatures, using information provided at Cal-Access from the three campaign committees supporting Proposition 29, indicated that only $40,599 was dispersed to Arno Political Consultants for signature-gathering.

See also: California ballot initiative petition signature costs

See also

• California 2012 ballot propositions
• 2012 ballot measures

External links

Suggest a link

• Proposition 29 in the official state voter guide
• Letter to Attorney General requesting ballot title (09-0065)
• Proposition 29 on Smart Voter
• Prop 29 on MapLight

Supporters:

• Website of "Californians for a Cure"
• Californians for a Cure, campaign committee in favor
• Hope 2010 Cure Cancer, campaign committee in favor
• American Cancer Society Cancer Action Network California Ballot Issue Committee, campaign committee in favor

Opponents:

• Californians Against Out-of-Control Taxes & Spending (main website of opponents)
• No on 29 - Californians Against Out-of-Control Taxes and Spending (campaign committee finance reports)
• California Citizens Against Wasteful Taxes - No on Prop 29 (campaign committee finance reports)

Additional reading:

• State Cigarette Excise Taxes — United States, 2010–2011, a publication of the Centers for Disease Control and Prevention
• Marin supervisors endorse $1 cigarette tax on ballot
• Big Snuff Makes Big TV Buys Here; Burnham Backs the Other Side
• What a cigarette tax should pay for
• Prop. 29 will shortchange education in California
• Tobacco tax sure to be a smoking-hot ballot topic
• Proposition 29: Why Should Voters Care?