A measure on the November ballot proposes the first tax increase on tobacco in California since 1998. Rich Pedroncelli Associated Press file
A measure on the November ballot proposes the first tax increase on tobacco in California since 1998. Rich Pedroncelli Associated Press file

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Capitol Alert

Tobacco companies mislead voters in radio ad

By Taryn Luna

tluna@sacbee.com

August 23, 2016 06:00 AM

If you listen to the radio, you’ve probably heard a new ad from cigarette companies Phillip Morris and R.J. Reynolds that makes strong claims about a November ballot measure to increase tobacco taxes by $2.

The makers of Marlboro and Camel cigarettes say only 13 percent of the revenue from a tobacco tax would help people quit or prevent children from smoking and allege that the ballot measure cheats California schools out of at least $600 million a year.

The one-minute ad, titled “Grab,” prompted the main proponents of the measure to send cease-and-desist letters to stations airing the piece.

The proponents say the ad is “factually false and is deliberately drafted to mislead voters about Proposition 56,” warning stations of their legal responsibility to remove false and misleading information from their airwaves.

Here’s the text of the ad and an analysis to sort fact from fiction:

Narration:

“Have you heard about Prop 56? The wealthy special interests behind it are telling us Prop. 56 is all about helping people stop smoking. But follow the money, and you’ll find out that only 13 percent of the new taxes would actually help people quit or keep kids from starting. Just 13 percent! Instead, most of the annual $1.4 billion in new tobacco taxes goes to health insurance companies and other wealthy special interests. And even worse, Prop. 56 was purposefully written to undermine our constitution’s minimum school funding guarantee, allowing special interests to divert at least $600 million a year away from our schools. Not one penny of the new taxes would go to improving our kids’ schools. Say ‘no’ to the wealthy special interests using the ballot box to increase their profits. Say ‘no’ to cheating our schools out of at least $600 million a year.”

Analysis:

The tobacco industry is omitting significant information and in some instances, uses the facts in a misleading way.

Proposition 56 increases the state excise tax by $2 per pack of 20 cigarettes, with equivalent $2 raises on e-cigarettes and other tobacco products.

The measure was written to exempt the new tobacco excise tax revenue from the state’s voter-approved school funding guarantee established in Proposition 98. Passed in 1988, Proposition 98 gives schools a leg up in budgeting over many other programs, requiring a minimum level of funding for K-12 schools and community colleges.

The new measure amends the state constitution and directs the tobacco tax revenue increase to a fund to pay for Medi-Cal and other health programs, instead of the general fund – the source of money for most state programs, including schools.

That being said, it isn’t fair to say the measure “cheats” schools out of $600 million a year. Nothing in the measure reduces school funding. If the measure passes, the budget for schools does not decrease.

It’s not unusual for tobacco tax measures to work around the general fund. The last two increases in tobacco taxes approved by voters put the money into special programs.

Tobacco has a point that only 13 percent of the new tax would actually help people quit or keep kids from starting, but it omits some context.

As written, the measure directs 11 percent of the tax revenue to the California Department of Public Health’s Tobacco Control Program and another 2 percent to the California Department of Education for school programs to prevent and reduce tobacco use among young people.

Up to $1 billion of the new revenue would fund Medi-Cal, a joint federal and state program that helps pay health care costs for qualifying low-income families. The money will increase the level of payment for health care, services and treatment provided to Medi-Cal patients, according to a Legislative Analyst’s Office report.

To offset budget shortfalls, the state authorized a 10 percent cut to Medi-Cal reimbursements in 2011. Medical interests have long lobbied Gov. Jerry Brown to rescind the rate cut, arguing that specialists cannot afford to accept new Medi-Cal patients, making it more difficult for the 13 million Californians who use the program to access care. Brown has resisted raising Medi-Cal reimbursement rates for doctors, saying higher rates would not guarantee better service.

Still, the tobacco companies don’t mention that the tax itself will reduce tobacco use. Studies show that people smoke less when the cost of cigarettes goes up.

Tom Steyer and Sen. Richard Pan, D-Sacramento, joined a coalition of medical and labor groups at C.K. McClatchy High School earlier this year to launch a petition to put a tobacco tax increase on the November ballot.

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PoliGRAPH is The Bee’s political fact checker, rating campaign advertisements and candidate claims as True, Iffy or False.

Taryn Luna: 916-326-5545, @TarynLuna