Legislators await clearer budget picture before deciding on governor’s proposed tax increase
by Andy Marso, KHI News Service
Rep. Don Hill, a Republican from Emporia, introduced a bill last year that would have raised the state’s cigarette tax by $1.50 per pack.
The bill died in the House Taxation Committee, where the chairman, Rep. Richard Carlson, a Republican from St. Marys, Kan., did not deem it worthy of a hearing.
This year, with the state facing a budget crisis after slashing income tax rates, Gov. Sam Brownback’s administration introduced an identical tobacco tax as part of a package to plug the projected $700 million deficit.
To sell the plan to legislators, the administration sent the Kansas Department of Revenue’s new legislative liaison: former Rep. Richard Carlson.
Carlson’s about-face illustrates the tension surrounding the public health community’s item of greatest interest this session.
A host of anti-cancer groups and other health advocates view the tobacco tax increase as good policy — regardless of the budget situation — that would save lives and save the state money on health care costs.
But they face conservative Republican majorities in the House and Senate that are resistant to any new taxes and have put the tobacco tax on the table this year only because the state is so strapped for cash.
Even their most powerful ally — the governor — seems a reluctant supporter.
“Well, I’m not too excited about them (either),” Brownback said Thursday when told legislators are not enthused about the tobacco tax and an accompanying alcohol tax increase he proposed. “Somebody was complaining that well, we don’t seem to be pushing the taxes. Well, I’m not excited about that. But what happens in this process is you get your budget set and then figure out OK, what can we do, trying to stay as pro-growth oriented as we can, to try to have the revenues we need to meet the budget the Legislature wants? I’m sure if everybody could do it, we’d do all the budget and no taxes.”
Opponents of the tobacco tax have seized on that ambivalence. At times they’ve conceded the health benefits of the tobacco increase but have urged legislators to push that from their minds and refocus on their distaste for taxing and spending.
New tobacco lobbyist
Tobacco companies, while largely staying out of the public debate, have hosted luncheons with guest speakers outlining the potential pitfalls of the increase and upped their lobbying clout.
The Wichita Eagle was the first to report that the nation’s second-largest tobacco company, Reynolds American Inc. (RAI), hired Brownback’s former chief of staff, David Kensinger, as a lobbyist.
RAI already retained the services of five lobbyists from Hein Government Consulting. But the addition of Kensinger was notable because he was one of a select group of lobbyists who received emails outlining the governor’s budget proposal — including the tobacco tax increase — before it was released publicly.
Kensinger declined to say this week when he began talking with RAI about representing it.
“I have the same policy (with RAI) as I do with all my clients,” Kensinger said. “Call my client.”
Bryan Hatchell, director of communications for RAI, didn’t respond to email and phone call requests for comment on when the company began talks with Kensinger.
Brownback said he did not believe giving Kensinger a sneak peek at the budget had provided him with an unfair advantage on other lobbyists in securing the contract, or given RAI an edge in fighting the tax. He did say he wished Kensinger was not lobbying for “that group, but he’s free to do what he is doing.” The governor also said he hoped the pro-tobacco tax side would prevail because he wants the state to continue moving toward consumption taxes instead of income taxes and because of the positive health effects of the tobacco tax.
Brownback said he got the idea to propose the tax from the University of Kansas Cancer Center, whose director, Roy Jensen, has been one of its most outspoken advocates. The governor said a commitment to decreasing the state’s smoking rate was key to the cancer center earning the National Cancer Institute designation.
“We’re going to try to get this across the line, and it will be a good public health issue,” Brownback said.
Hill, the Emporia legislator who proposed the tax increase last year at the request of the American Cancer Society’s Cancer Action Network, said Kensinger’s hiring gives some insight into how serious RAI is taking the tobacco tax fight.
“The corporate interests that have huge bucks are going to be strategic about who’s badging up for them, and they found a willing representative,” Hill said.
Committee testimony
Kensinger’s official connection to the administration ended in April 2012, but his ties to Brownback date to 1994. His new role with RAI raises questions about how strenuously the administration will pursue the proposed tax increase.
The administration has sent Carlson to testify for it in committees, but he has focused solely on its potential to close the budget gap. A Department of Revenue spokeswoman said he was not available to comment for this story.
There appears to be no sense of urgency among legislative leadership either.
Chairmen of the House and Senate tax committees said last week that they will take no action on bills containing alcohol and tobacco tax increases until they return for the veto session in May.
In the interim, they will receive updated revenue projections that will let them know just how dire the budget situation is.
“Everybody believes it’s prudent to not have any tax proposals under consideration until we really know what hole may need to be filled,” said Rep. Marvin Kleeb, a Republican from Overland Park who chairs the House Taxation Committee.
Sen. Les Donovan, a Republican from Wichita who chairs the Senate Assessment and Taxation Committee, agreed it would be premature to assess the bill before the revenue numbers come out.
But he said the bill was worth consideration.
“It has merit,” Donovan said. “The more people you get to not smoke, the healthier the state’s going to be. But the more people who don’t smoke, the less revenue you’re going to get.”
‘Tax that saves lives’
Public health advocates from several organizations have pointed to research on tobacco tax increases in other states that show higher taxes spur people to quit, but the states still collect more revenue because the taxes paid by those who continue to smoke outweigh the revenue lost by those who quit.
They’ve also been trying to sell legislators on its health benefits, regardless of the budget situation.
Reagan Cussimanio, a lobbyist for the Cancer Action Network, has repeatedly called it “the only tax that saves lives” and said she believes the message is getting through.
“The political realities are that you have a Legislature that doesn’t fully know their revenue situation,” Cussimanio said. “But I do think they’re starting to understand the health impact.”
But the bill faces opposition from multiple wings of the Legislature.
Rep. Michael Houser, a conservative Republican from Columbus, said he would not be voting for it because he feared it would drive tobacco consumers in his border district across the state line. He said others feel the same.
“I don’t think it’s going to happen,” Houser said.
Hill said he supports the measure because of its public health benefits and said the best tobacco tax is “the one that won’t yield any revenue” because it has spurred everyone to quit using tobacco.
But he acknowledged that’s unlikely to happen and said the tobacco tax is imperfect in that it falls disproportionately on lower-income Kansans. That could hurt its chances in the House, he said.
“There’s a lot of opposition out there, even among a big number of people that acknowledge we need to have some revenue enhancements,” Hill said. “It is a regressive tax, and I don’t see any possibility at all it passes unless it’s part of a package that will include, among other things, some income tax.”
The nonprofit KHI News Service is an editorially independent initiative of the Kansas Health Institute and a partner in the Heartland Health Monitor reporting collaboration. All stories and photos may be republished at no cost with proper attribution and a link back to KHI.org when a story is reposted online.
– See more at http://www.khi.org/news/article/administration-silent-as-tobacco-tax-stalls#sthash.xwgaiWOF.dpuf
