Proposition 29 — Forget Ballot Box Budgeting

The American Cancer Society, American Heart Association and American Lung Association wrote Proposition 29, the measure on the June 5 ballot in California to increase the state’s cigarette tax by $1, to $1.87 per pack. Lung Association President Jane Warner likes to emphasize the demarcation at play: She’s with the good guys, while the bad guys, big tobacco, will spend buckets more money trying to fight the measure than her groups will spend trying to pass it.

It’s the virtuous underdogs vs. the nefarious moneybags. Good vs. evil.

There’s one unmistakable plus that comes with raising the tobacco tax: As Warner explained, “if you raise the cost of cigarettes, smoking goes down, especially among children.”

The unmistakable downside: Prop. 29, which would raise an expected $735 million annually, represents the kind of me-first lawmaking that helped dig the state government’s $9.2 billion budget hole.

I cannot help but look at Prop. 29 and wonder: If raising state cigarette taxes should reduce smoking all by itself, why not put the new money in the state’s cash-starved general fund? When Sacramento has to implement further cuts or new taxes to fill a gaping hole, why did Prop. 29’s authors insist on raising money to bankroll their preferred programs — mostly cancer research and anti-smoking campaigns, for which Washington and Sacramento already pay.

Prop. 29 is “ballot box budgeting.” People and organizations with money write ballot measures that appeal to voters because they dedicate tax dollars to popular programs. It’s like asking a child, “Which would you rather eat first, broccoli or ice cream?”

Of course, voters feel good when they vote to protect mental health services or after-school programs. They are not so happy when lawmakers have to slash spending because they don’t have much flexibility on the budget. Because lawmakers have limited say on how $40 billion in special funds are spent, they must make most spending cuts in the $93 billion general fund.

Robert Stern, former president of the Center for Governmental Studies, agrees that Prop. 29 represents ballot box budgeting, but he says it’s “a different type of ballot box budgeting.” It is unlike the 2004 ballot measure that authorized $3 billion in bonds to fund stem cell research, for which the general fund pays interest. Prop. 29, at least, pays for itself.

Also, as American Cancer Society Vice President Jim Knox argued, “there is an obvious nexus to the product that’s being taxed” and how the money is spent.

True, but it’s still a tax increase to bankroll shiny new programs while Sacramento faces cutting existing programs.

Mike Genest, state director of finance under former Gov. Arnold Schwarzenegger and now a consultant, has seen how these special funds can “get out of control.” Prop. 71 spawned the California Institute for Regenerative Medicine, which paid former California Democratic Party Chairman Art Torres a $225,000 salary and investment banker Jonathan Thomas $400,000 to serve as chairman — for a four-day workweek. These special funds invite a certain arrogance, Genest noted, that can lead to “another black mark on government.”

At a San Francisco Chronicle editorial board meeting last week, I asked Genest and fellow Prop. 29 opponent David Kline of the California Taxpayers Association whether they would support a $1-per-pack cigarette tax if the money went to the general fund.

Kline didn’t think he would. CalTax doesn’t go for “targeted taxes,” he said, especially one designed to bring in less money over time, assuming the anti-smoking programs work.

Also, CalTax understands that smokers will have to pick up the tab, and that has ramifications on California’s overall economy.

Genest said that he doesn’t like Prop. 29’s steep rise in cigarette taxes. But among the many things that Sacramento lawmakers may have to do to balance the books, he said, a higher tobacco tax “could fit in the mix.”

The Prop. 29 folks told the Chronicle that Californians would not approve a tobacco tax increase that would put the money into the general fund, because voters don’t trust the Legislature.

So Prop. 29’s authors had to give the money to their cause. And they’re the good guys.

Email Debra J. Saunders at [email protected].

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