Currently, the state collects excise taxes of 87 cents per pack of cigarettes, and equivalent amounts on other tobacco products. These funds are distributed to the general fund (10 cents); the Breast Cancer Fund (2 cents); early childhood development programs established by Proposition 10 of 1998 (50 cents); and tobacco education and prevention programs, tobacco-related disease research, health care services for low income uninsured persons, and environmental protection and recreation programs established by Proposition 99 of 1988 (25 cents).

Medi-Cal provides health care services to children in families with incomes generally up to 133 percent of the federal poverty level (FPL). The Healthy Families Program provides insurance to children in families with incomes generally below 250 percent of FPL who do not qualify for Medi-Cal.

(Please see the Legislative Analyst's Office (LAO) Voter Information Guide analysis for more detailed information about Proposition 86.)

This initiative would increase the excise tax on cigarettes to fund children's health insurance, improved access to emergency care, nurse education and training, and smoking reduction and smoking related disease prevention, treatment and research efforts.

The initiative increases excise taxes on cigarettes by $2.60 and on other tobacco products by an equivalent amount. This increase is above the current excise level of 87 cents per pack and would raise the average price of cigarettes to $6.55 per pack.

It is anticipated that the revenue would be $2.1 billion in 2007-08, with declining amounts annually thereafter due to reduced sale of tobacco products. It is possible that sales would decline more than anticipated due to the size of the tax increase, resulting in smaller than expected revenues. Reduction in revenues collected under Proposition 10 as a result of reduced sales would be backfilled.

After backfilling, the remaining revenues would be allocated as follows:

• 52.75 percent to a Health Treatment and Services Account used primarily to provide funding to hospitals for emergency services, to other treatment programs such as community clinics, and to nursing education.
• 42.25 percent to a Health Maintenance and Disease Prevention Account. Funding would primarily support health insurance for children and programs to curb tobacco use, regulate sales of tobacco products, and support various health and education programs.
• 5 percent to a Health and Disease Research Account, including specific allocations to a statewide cancer registry and to research on cancer in general, breast and lung cancers, and tobacco-related diseases and tobacco control.

Based on anticipated revenues of $2.1 billion, distribution of funds would include (partial list):

• $758 million for hospital emergency services
• $371 million for children's health insurance
• $364 million for cancer, heart, asthma, and other disease prevention, treatment and control programs
• $177 million for tobacco prevention, education, and enforcement programs
• $92 million for nurse education programs

Because of the size of the tax increase, predictions of consumer response are uncertain. While there is evidence to support assumptions about consumer response to smaller increases, it is not clear that the response would be similar in this case. Most likely, price increases will result in reduced purchases of tobacco products. Also, it is likely that some smokers will avoid paying taxes through Internet purchases, purchase on tribal lands, or through purchase of smuggled products. In that case, revenues collected under the initiative may be smaller than anticipated.

However, the Legislative Analyst's Office estimates the following:

• Revenues of $1.2 billion in 2006-07 (half year), and $2.1 billion in 2007-08.
• Neutral effects on state General Fund revenues. Declining tobacco tax revenues due to reduced sales would be offset by increased sales tax revenues from higher prices.
• Local governments are expected to receive an annual increase in sales tax revenue in the low millions of dollars.
• Losses to Proposition 99 and the Breast Cancer Fund due to decreased sales would be more than offset by the additional revenues under this measure.
• Hospitals operated by the state and county governments are likely to receive increased revenues in the low hundreds of millions of dollars annually.
• Revenues directed to the expansion of children's health coverage would probably exceed the actual costs in the early years. As sales decline, however, it is possible that the costs will exceed revenues. In that case, actions would have to be taken to limit enrollment, or the state would have to provide additional support for the program.

OTHER EFFECTS

Advocates anticipate that the price increases produced by this initiative will result in reductions in new teen smokers. Nearly 90 percent of adult smokers began smoking before age 18. The tobacco prevention, education and enforcement programs mandated by the initiative will also reduce teen smoking because they will counter the effects of tobacco advertising. Teens have been shown to be three times more influenced by tobacco advertising than adults. Reductions in the number of new smokers will contribute to the improved health of the population over the long term.

SUPPORTERS Signing ballot arguments for	OPPONENTS Signing ballot arguments against:
Carolyn Rhee, Chair American Cancer Society, California Division	Larry McCarthy, President California Taxpayers' Association
P. K. Shah, M.D., President American Heart Association, Western States Affiliate	James G. Knight, M.D., Past President San Diego County Medical Society
Timothy A. Morris, M.D., Board Member American Lung Association of California	Steven Remige, President Association of Los Angeles Deputy Sheriffs

The rebuttal to the opponents' argument was signed by Mila Garcia, R.N., Member, American Heart Association, Western States Affiliate; Willie Goffney, M.D., FACS, President, American Cancer Society, California Division; and Rick Donaldson, Ph.D., RCP, Chair, American Lung Association of California.

Proposition 86 is sponsored by the American Cancer Society; American Lung Association of California; American Heart Association; California Hospital Association; The Children's Partnership; Children Now; Tobacco-Free Kids Action Fund; California Emergency Nurses Association; Association of California Nurse Leaders; PICO California; California Primary Care Association; American College of Emergency Physicians, California Chapter; and the Emergency and Acute Care Medical Corporation. Other supporters include the American Academy of Pediatrics/California Chapter, League of United Latin American Citizens, California Black Health Network, Los Angeles Chamber of Commerce, and the League of Women Voters of California.

Barbara Storey, LWVC Health Care Program Director, healthcare@lwvc.org

Pat Snyder, LWVC Health Care Legislative Consultant, healthcare@lwvc.org

Julie Rajan, LWVC Social Policy Director, social_policy@lwvc.org

Trudy Schafer, LWVC Program Director/Advocate, 801 12th Street, Suite 220, Sacramento 95814, 916-442-0210, Fax 916-442-7362, advocacy@lwvc.org

Coalition for a Healthy California, 916-448-2720, www.healthycalifornia.org

HealthVote.org, www.healthvote.org, provides facts and nonpartisan analysis on California's health-related ballot measure campaigns, including campaign financing and television advertising.

California Budget Project, What Would Proposition 86 Mean for California?, September 2006, www.cbp.org

YES on Proposition 86
Tobacco Tax Act of 2006

• Public health experts agree that taxing tobacco will save lives. Proposition 86 will prevent thousands who do not yet smoke, especially teens, from starting. It will also cut tobacco use dramatically among those who now smoke.
• According to the California Department of Health Services (DHS), this tobacco tax increase will prevent more than 700,000 kids now under the age of 17 from becoming adult smokers. It will prevent nearly 180,000 smoking-related deaths among that group.
• Proposition 86 will prevent approximately 120,000 additional deaths due to smoking among current California adult smokers who quit smoking.
• The DHS estimates that Proposition 86 will save $16.5 billion in health care costs resulting from the reduction in medical conditions caused by smoking.
• The $2.1 billion revenue raised by Proposition 86 will go to help fund some of California's critical healthcare needs including:
• emergency care services
• health insurance for children
• nursing education
• tobacco use prevention programs
• enforcement of tobacco-related laws
• research, prevention, and treatment of health problems including cancer, heart disease, stroke, asthma and obesity.
• Proposition 86 includes financial safeguards, including independent audits, annual public reporting, and limits on administrative costs to make sure the money will go where the voters intended.

Note: Please adapt this letter to your own community and check your local paper's word limit for published letters.

Editor:

Proposition 86 on the November ballot is an opportunity to save lives, save money on healthcare costs and increase critical healthcare services at the same time.

The measure would raise the tobacco tax by $2.60 a pack. Health care experts say that would discourage thousands of new smokers, especially teens, from starting to smoke and cause thousands more current smokers to stop or reduce smoking.

The California Department of Health Services estimates that Proposition 86 will save over $16 billion in medical costs caused by smoking.

The measure would also fund a number of critical health care needs, including emergency services, health insurance for children, nursing education, tobacco use prevention programs and research, and prevention and treatment of serious health problems, including cancer and heart disease.

Vote YES on Proposition 86 on the November 7 ballot.

Sincerely,

(your name)