Tuesday, Oct. 02 2012 5:55PM

Tobacco tax increases on Nov. 6 ballot

Forum on issues held by LS Chamber of Commerce

By Russ Pulley

rpulley@lsjournal.com

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Missourians will have opportunity Nov. 6 to vote on raising tobacco taxes and also on a law to prohibit the governor from setting up a health-insurance exchange.

The ballot measures were debated by guests invited to a forum held Oct. 2 by the Lee’s Summit Chamber of Commerce. They gave overviews of their interpretations of the proposed laws and predicted outcomes. A small group heard the guests and asked questions at the forum held at the University of Central Missouri campus at the Summit Technology Center.

Presenters for Proposition B, on tobacco taxes, were Ron Leone from the Missouri Petroleum & Convenience Store Association, Amada Petelin, of the American Cancer Society and Roy Temple, campaign manager for the effort to pass the tax.

Speaking on Proposition E were Mark Siettmann, chief of staff for State Senator Will Kraus, who was participating on his own behalf and not representing Kraus, and Andrea Routh of the Missouri Health Advocacy Alliance.

Advocates for the tobacco tax say it will help discourage smoking and provide additional money for Missouri Education. A provision of Propostion B calls for creation of a Health & Education Trust Fund, where the tobacco tax revenue would be deposited.

The ballot measure adds a tax increase of 3.65-cents per cigarette and 25 percent of manufacturer’s invoice for roll-your-own tobacco and 15 percent for other products. It’s estimated to add $283 million to $423 million to state revenue, paid into the trust fund. Money in the trust fund would be split, with 20 percent going to programs for smoking cessation, 50 percent to local schools and 30 percent to higher education.

Supporters of the tax said it would moves Missouri’s tax from lowest in the nation at 17 cents per pack to 33rd at 90 cents a pack.

A lot of the debate was on the tobacco tax increase’s potential economic impact. Opponents contend the tax will hurt small businesses which sell the tobacco products.

Leone said Missouri is bordered by eight states which will be more competitive if Missouri raises its tobacco taxes.

He said particularly Kansas residents cross the state line because of the tax advantages.

“People come over to buy smokes and fill up their cars,” Leone said.

The tax increase would make Missouri taxes higher than four bordering states, including Kansas, and make the other four more competitive.

Leone said a study by University of Missouri economist Joe Haslag suggests about 157 million fewer packs will be sold in the state.

“At least a $67 million hole in sales tax revenue,” Leone said. Less money for local cities, he said.

Temple countered that people who stopped spending money on cigarettes would spend it on other items, maybe fast food, so sales taxes will come in from other retailers.

“That money will find its way back into the local economy,” Temple said.

He said the state has the lowest tobacco taxes of any in the nation while smoking costs Missourians about $532 million for Medicaid payments for healthcare related to smoking, while the state’s revenue is about $95 million from the current tax.

Leone said that “not one dime” of the Prop B plan goes directly into healthcare, while Temple replied that as more people quit smoking because the cost of the habit goes up, smoking related healthcare costs for the state will drop.

“Healthcare is already a winner because less sick people are going to the hospital,” Temple said.

Proposition E would prohibit the Governor or any state agency from establishing or operating state-based health insurance exchanges unless authorized by a vote of the people or the by the legislature.

Insurance exchanges are a mechanism to allow people to buy insurance from a “menu” of suppliers. They can be set up privately or by the government. In this case, the federal Affordable Healthcare Act asks every state to set up an exchange (or the federal government will do so for states that don’t) partly as a venue to allow people a way to apply for federal subsidies when buying insurance.

While discussing Prop E, Siettmann and Routh agreed that properly designed health exchanges might work and that the political relationship between Gov. Jay Nixon and the legislature resulted in this ballot measure.

They disagreed, in part, on the background of why the measure came about.

Siettmann said from his observations the governor’s office didn’t communicate with legislators and was willing to set up an exchange independently.

Routh interpreted events at the Missouri Capitol differently, saying she believes the governor would have gone to the legislature for approval, but started prepartory work for an exchange. But she admitted the governor’s office could have done better job communicating with the Senate.

Routh said at this point it is too late for the state to set up its own health insurance exchange, because of deadlines in the federal healthcare act. Federal officials will be setting up an exchange for Missouri.

Routh said voters should reject the proposition because it sets a climate that makes expensive lawsuits likely. She also said the proposal’s language will make it difficult for the exchange to be set up so that it can work for Missourians.

It reads in part “the act prohibits departments and agencies from providing assistance or resources of any kind to any federal agency or department relating to the creation of a federally-facilitated health benefit exchange unless the assistance or resources are authorized by state statute or the assistance is mandated by federal law.”

State employees couldn’t give information to federal officials, she said.

“Every day they’ll have to look at themselves and say, ‘Do I obey the federal law or state law?’” she said.

Siettmann said the issue is that, “This governor believes his administrative powers are greater than the legislators powers.”

He said the proposition is about who and how the state should set up an exchange. He said the proposition allows the state to cooperate with setting up the federal exchange but with cooperation of the legislature or by a vote of the people.

He said there were several reasons the Missouri Senate delayed acting, after the Missouri House passed legislation for a state exchange, including uncertainty if the federal law would be found to be constitutional by the U.S. Supreme Court.

The full text for the propositions is available at: http://www.sos.mo.gov/elections/2012ballot/-

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