California Cigarette Tax Vote Too Close to Call
A contentious California ballot proposal to add a $1-a-pack tax on cigarettes to fund cancer research was too close to call after a $65 million spending spree by opponents and supporters.
As of Wednesday morning, opposition to the increase led by just over 1 percent, or about 64,000 votes, out of more than 3.8 million votes counted. But there's an unknown number of ballots left to be tallied.
In California, even with all precincts reporting, there typically are many late-arriving early voting and absentee ballots not counted until after Election Day. These ballots typically comprise up to 20 percent of all votes, meaning potentially hundreds of thousands of votes are still to be counted statewide.
Fabled as a mecca for the health-conscious and fitness-obsessed, California is also one of only a few states that has not hiked its cigarette taxes in the last decade, meaning it is less expensive to light up in Los Angeles and San Francisco than many other places in the country.
The tobacco industry and small business groups wanted to keep it that way.
Tobacco companies amassed nearly $50 million to kill the initiative on Tuesday's California ballot. Proposition 29 was championed by cycling star Lance Armstrong and supported by New York Mayor Michael Bloomberg, who donated $500,000 to its campaign.
Marlboro-maker Altria Group, RJ Reynolds and other tobacco heavyweights spent their millions on a media blitz to snuff out Prop. 29, which would slap an additional $1-per-pack tax on cigarettes and other tobacco products to fund cancer research.
If the tax passes, California would still have only the 16th-highest tax rate in the nation, at $1.87 per pack. But tobacco companies and their allies say that voter approval of an extra tax in the nation's largest cigarette market would crush owners of small businesses and spark anti-smoking measures elsewhere.
"We all know that Big Tobacco has poured tens of millions in this campaign saying, 'Don't tax us any more,'" said Armstrong, who beat testicular cancer that had spread to his brain and lungs more than a decade ago. "But the fact of the matter is the product they sell leads to about $9 billion a year in health care costs for California. I think if this passes, other states will follow."
The Public Policy Institute of California found that support for the initiative dropped from 67 percent in March to 53 percent by late May, reflecting the blizzard of radio and TV ads from the tobacco industry.
As the vote approached, Armstrong and other smoking foes, including Bloomberg and Laurene Powell Jobs, the widow of the late Apple CEO Steve Jobs, are pouring in their own money to counter the industry.
Bloomberg has banned smoking in New York bars and parks during his decade in office.
"California is a particularly important state, and it's very visible on this issue," he said in a telephone interview. "A lot of people there will die unless we do something to stop Big Tobacco."
The $12.2 million anti-smoking groups have raised comes to about one-quarter of the $47 million war chest built by the major tobacco companies. The anti-tax contributions exceed those of any other federal independent expenditure committee except the "Restore Our Future" super PAC supporting Republican presidential candidate Mitt Romney, according to recent campaign finance figures.
Smoking is not as common in California, the nation's most populous state, as it is in other pockets of the country. Smoking rates are among the nation's lowest in California, at 12.1 percent, and highest in Kentucky, at 24.8 percent, the federal Centers for Disease Control and Prevention found in 2010.
Still, California represents a huge market for the tobacco industry. Smokers in the state bought about 970 million packs of cigarettes — spending approximately $5.2 billion — in fiscal year 2010, the most recent year for which national figures are available. Some of that money went to an existing tobacco tax, which sends 25 cents from each pack purchased to fund anti-smoking programs, provide health care services to the poor and fund tobacco-related research.
That helped reduce tobacco sales. In the 15 years after it went into effect in 1988, the industry lost $9.2 billion in pretax sales, according to a study by researchers at the University of California, San Francisco's Center for Tobacco Control Research and Education.
Then, in 2006, tobacco companies spent $66 million to defeat a previous measure that would have created an extra $2.60-per-pack tax.
The opposition campaign focused its messages on the state's budget mess, calling the California Cancer Research Act a folly that will force taxpayers to support a bloated bureaucracy that will send research money out of state. Opponents also said it could end up raising millions of dollars yet produce little research that develops new cancer treatments.
"The tobacco companies realize that we have a like mind in opposing both tax burdens and policies that create a business-unfriendly environment," said Joel Fox, president of the Los Angeles-based Small Business Action Committee, which he said has received hundreds of thousands of dollars from tobacco companies to support anti-tax policies in the last decade. "It's the first domino of potentially taxing all kinds of products."
The nonpartisan California Legislative Analyst's Office says Proposition 29 would generate about $735 million a year in revenue if approved.
The anti-tax campaign was quick on the ground, launching radio and TV commercials a month and a half ago.
Armstrong and his coalition, including the American Cancer Society, American Lung Association, American Heart Association and California Medical Association, were too poor to mount an early advertising campaign, he said.
Aside from Armstrong, who visited with young patients during an event at a Los Angeles children's hospital earlier this month, the measure has not attracted much celebrity support. Laura Ziskin, a Hollywood producer celebrated for the "Spider-Man" movie franchise, was on the initiative's campaign board until she died last year of breast cancer.
Even so, in the final days before the primary, the battle over Proposition 29 was arguably the most high-profile campaign in an election season that has failed to generate much enthusiasm.
"The supporters and opponents wouldn't spend these millions of dollars if these commercials weren't persuading voters," said Daniel Newman, president of MapLight, a nonpartisan group that analyzes money's role in politics. "When one side has a specific financial interest, they are going to spend much more because they get such a high return on investment."