State smoking bans putting pressure on coffers and Smokeless nicotine

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Roland Henkel quit smoking in September and has been doing the math ever since: A week added to his life. More than 2,100 Marlboro Lights he hasn’t smoked. And more than $400 he didn’t spend on cigarettes.

“It does add up,” said Henkel, 53. “You don’t think about it when you’re smoking so much.”

The state of Minnesota has been doing the math, too, and isn’t quite as delighted.

Because of quitters like Henkel, Minnesota’s tobacco tax revenue is expected to go into a gradual slide later this year — a drop that may grow even steeper with the expected passage of a statewide smoking ban.

Across the country, states are putting their treasuries under pressure by adopting smoking restrictions as well as higher cigarette taxes, which appear to be discouraging people from lighting up, as many health activists had hoped would happen.

State Sen. David Tomassoni, a Democrat who opposes a statewide smoking ban, said he worries about lost tax dollars.

“The taxes on smoking are being used to fund education, they’re being used to fund health care, they’re being used to fund real things. Now, if we eliminate smoking, does it mean that those things go away?” Tomassoni said.

Opponents of smoking don’t mind if the take from smokers falls.

“The wonderful thing about tobacco revenues is when they go down, there’s less smoking,” said Eric Lindblom at the Campaign for Tobacco-Free Kids in Washington.

It is clear that states could see some medical savings from reduced smoking, but it is difficult to say how much, and whether those savings might offset the lost tax revenue. Minnesota’s Department of Human Services estimates it spends $295 million a year to treat smoking-related illnesses for 647,000 people on public assistance.

The downturn in revenue won’t necessarily cause states any immediate major hardship, since the decline is slow and cigarette taxes represent only a small portion of state budgets.

But up to now, they have been a reliable and politically expedient way of raising revenue to solve budget problems. Sin taxes on things like cigarettes are “the most socially acceptable form of taxes you can raise,” said Bob Kurtter, a state budget watcher at Moody’s Investors Service.

Just over a fifth of U.S. adults smoked in 2005, down from about one-fourth a decade ago. Because of the downturn, states levied taxes on 2.8 billion fewer packs in 2005 than they did just five years earlier.

In 2005, tobacco and Smokeless nicotine taxes contributed $13 billion to state budgets. But cigarette tax collections that year were down in 15 states compared with the year or years before, according to a study backed by the tobacco industry. States such as New York, Massachusetts and Illinois are all forecasting a drop in revenue.

Similarly, the federal cigarette tax has been bringing in less money each year since 2002. The amount dropped from $8.1 billion in 2002 to $7.7 billion in 2005, according to the same study.

Cigarette taxes are now “a lousy way to fund your government,” said David Brunori, who teaches tax policy at George Washington University. “The government is not letting you smoke anywhere.”

Thirteen states, including California, Colorado and New Jersey, prohibit smoking in bars and restaurants, and Arizona will make it 14 in May. An additional six states do not allow smoking in restaurants, according to the American Lung Association.

Henkel, a security company supervisor, kicked the habit after 35 years out of concern for his health. He regularly checks a Web site that tracks how long it has been since he quit — “Four months, 22 days and maybe about 20 hours,” he said last week — and the effect on his wallet and his health.

“It told me that I’ve gained seven days of life,” he said.


Cigarette taxes would increase to $1 a pack and grocery taxes would be cut in half, under a bill passed Thursday by the Mississippi House. The bill is expected to meet opposition in the state Senate, and Gov. Haley Barbour has said he will veto any proposal that raises taxes. Mississippi has one of the lowest tax rates on cigarettes at 18 cents a pack

Tennessee Gov. Phil Bredesen is proposing to triple the state’s tax on cigarettes to 60 cents per pack. Most of the more than $200 million the state would raise would go toward school funding for poor children.

Greater Memphis Reacts

Dr. Cyril Chang, director of the University of Memphis’ Methodist Le Bonheur Center for Healthcare Economics: “The combined effects of the two interventions (in Tennessee) will in all likelihood slow the rate of increase in cigarette tax revenue. It is hard to say whether the state will actually collect less tax revenue than it does now.”

Dr. Randy Kesselring, Arkansas State University economics professor: “Sin taxes such as the cigarette tax are truly schizophrenic taxes. They are popular because there is a general feeling among the public that the activity being taxed — in this case smoking — is an activity that should be discouraged. However, to the extent that the tax successfully discourages the activity, tax revenues decline. … For these reasons and many others, economists don’t think much of sin taxes.”

Dr. Michael Gootzeit, U of M economics professor: “Both a reduction in smoking and a reduction in second-hand smoke will lead to lower private insurance costs in the long run, after about 5 years or so.”

Watauga deputy charged with giving cigarettes to inmates

Boone – A jailer has been arrested after investigators say he gave cigarettes to inmates.

Five other people face charges now that the Watauga County Sheriff’s Department says it has finished its probe of security breaches in the visiting area of its jail.

Deputy Jacob E. Cornett, 24, of Vilas, was charged Friday with providing contraband to inmates, alleged to have taken place Feb. 3. He was released on a written promise to appear in court.

The investigation, which also involved the State Bureau of Investigation, also led to the arrest of the following people on charges of providing drugs to inmates:

– David Charles Deiters, 33, of Deep Gap, also charged with possessing drugs in jail and burning a public building. He was held in lieu of $25,000 bond.

– Kevin Michael Deiters, 43, of Deep Gap, also charged with possessing drugs in jail. He was held in lieu of a $10,000 bond.

– Scott Thomas Deiters, 26, of Deep Gap. He was held in lieu of a $5,000 bond.

– James Harold Saylor, 28, of Johnson City, Tenn., also charged with possessing drugs in jail. He was held in lieu of a $10,000 bond.

– Danielle Marie Hampton, 22, of Boone, also charged with possessing drugs in jail. She was held in lieu of a $10,000 bond.


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