Voters have crushed out cigarette taxes

OKLAHOMA CITY — Asking voters to raise taxes on cigarettes hasn’t worked out well for some states.

Of three states that put a cigarette tax on the ballot in the past decade, only South Dakota’s voters signed off, according to the bipartisan National Conference of State Legislatures. Proposals failed in Oregon and Missouri.

Nowhere have voters blessed such a hike since 2007, according to the group.

Norton Francis, a tax policy analyst with the Urban-Brookings Tax Policy Center, said ballot referendums for taxes, whether proposed by lawmakers or citizens, are tricky business.

“It’s hard to do tax increases through direct voting,” he said. “Given the history in other states, I wouldn’t tie something critical to it.”

Still, Oklahoma lawmakers are considering doing just that, with a plan that would collect $1.50 per pack in new cigarette taxes for the state’s ailing Medicaid program.

Skeptical that the plan can win the legislative super-majority required to raise taxes — or at least 76 of 101 members of the House and 36 of 48 state senators — some lawmakers believe its future rests with voters.

Tax supporters say the $180 million it’s expected to raise is needed now — not after the question goes before voters in November.

In light of a $1.3 billion state budget shortfall, hospitals, nursing homes, doctors and other medical providers face a 25 percent cut in Medicaid reimbursements, which some say threatens their survival.

Asked about odds of the tax proposal ending up on November’s ballot, Senate President Brian Bingman, R-Supulpa, was uncertain. More than half of lawmakers must agree before a question is put to voters.

Bingman said tax supporters “seem encouraged.”

“Earlier in the session, I’d have said no chance,” he said. “I thought it would be difficult to get a majority — a simple majority.”

A larger super-majority is “very challenging,” he added, but supporters are working hard to put one together.

In an email this week, aides for House Speaker Jeff Hickman, R-Fairview, sidestepped the issue, noting that the tax proposal could end up before voters or before lawmakers.

Rep. Earl Sears, R-Bartlesville, chairman of the House Appropriations and Budget Committee, said he doesn’t know what kind of support the tax has among Republicans.

Gov. Mary Fallin, who supports the tax, said she’s encouraging lawmakers to act before November.

“I think if we sent it to a vote of the people in November, that you would have big lobbyists, tobacco groups that would come and spend large amounts of money campaigning against it, because they have a lot at risk financially,” she said.

In Oregon, opponents of a failed 84.5 cent per pack tax hike, which was proposed by the Legislature, outspent proponents by about $4.5 million during a referendum campaign.

Even after the question failed, a few years later lawmakers approved a tax anyway, to help fund health care and anti-smoking programs.

Francis said legislators there failed to “clearly define” how the tax would be spent. Ambiguity in ballot wording about how a tax is spent typically makes voters less likely to support it, he said.

In other cases, tax increases end up on ballots as lawmakers sidestep a pledge not to raise taxes, he said.

South Dakota’s successful 2006 citizen-led initiative raised the state’s cigarette tax by $1.25, according to the Conference of State Legislatures. Money raised was split between the state’s general revenue fund, tobacco prevention, education, health care and property tax reductions.

Missouri’s failed 2012 citizen initiative would have raised its per pack tax by 73 cents to fund education and health care.

If Oklahoma pushes off its tax question until November, Francis noted, any tax revenue probably won’t be available until January — halfway through the budget year and long after lawmakers need it.

Another issue, he noted, is that the tax probably won’t raise enough money. Health care costs continue to rise, while revenue generated by a cigarette tax will remain flat or drop as people stop lighting up.

“It could be a piece of the puzzle,” he said. “You just want to make sure, whatever you dedicate to it, you’re not promising you’re going to support that service forever when it’s a growing service.”

Janelle Stecklein covers the Oklahoma Statehouse for CNHI’s newspapers and websites. Reach her at jstecklein@cnhi.com