Posted by: audreybenenati | December 22, 2009

Report: State tobacco funds misused

Published: December 21, 2009 08:06 pm

The Associated Press

MORGANTOWN — All 50 states are raking in more tobacco-generated money than ever, but spending less on tobacco-prevention programs, says a report from the Campaign for Tobacco-Free Kids.

West Virginia is spending $6.9 million this year on tobacco programs, but none of it is earmarked from tobacco taxes or the 1998 tobacco settlement. In fact, since 2008, all of the tobacco settlement money has gone to the state Teachers Retirement System.

The recently released report is called “A Broken Promise to Our Children: The 1998 State Tobacco Settlement 11 Years Later.”

It says that for Fiscal Year 2010, states will collect $25.1 billion in tobacco revenue, but spend only $567.5 million, 2.3 percent of the total, on prevention and cessation programs.

West Virginia took in $176 million in fiscal year 2009 from tobacco revenues according to the report, and will spend $6.9 million on programs in FY 2010.

“If the nation is to continue reducing smoking and other toabcco use,” it says, “elected officials at all levels of government must resist complacency and redouble efforts to implement scientifically proven measures to reduce tobacco use.”

And, except for a handful of states, the report says, they are spending only a fraction of what the U.S. Centers for Disease Control and Prevention (CDC) recommends they spend on such programs. This despite statistics showing the health costs of tobacco use and the benefits of programs to fight tobacco use.

The CDC recommends each state spend a certain amount of money — from tobacco taxes and the 1998 Master Settlement Agreement — on tobacco prevention and cessation programs, Terry F. Pechacek, CDC associate director for Science, Office on Smoking and Health, told The Dominion Post.

The recommendations are based on the estimated per capita costs to run tobacco programs in five categories: state and community programs and policies, media campaigns, cessation programs, efforts to monitor effectiveness of programs and administration and management of programs.

The Broken Promise report ranks states on how much they spend relative to the CDC recommendations.

West Virginia ranks 20th, spending spending $6.9 million, 24.7 percent of a recommended $27.8 million.

North Dakota is best, spending $9.4 million when the CDC recommends $9.3 million — 100.6 percent. Tennessee is worst, spending $1.5 million, 2.1 percent of the CDC recommendation of $71.7 million.

West Virginia ranks higher than all its neighboring states. Ohio comes in at 45th, spending $7.4 million, 5.1 percent of the recommended $145 million. The report says that if all states fully funded their programs, in five years, 5 million fewer people would smoke — bringing associated savings in health care costs.

West Virginia’s settlement money In Fiscal Year 2009, according to the state tax office, the cigarette tax and tobacco product taxes generated a combined $115.1 million.

The last collection of tobacco settlement money was $51.8 million in FY 2006.

A 2007 law created the Tobacco Settlement Finance Authority, which now uses the money to make bond payments to pay down the Teachers Retirement Fund debt, said Kimberly Osborne of the tax office.

The FY 2009 payment is $79.1 million.

“This action freed up the General Revenue Fund as a large portion, at the time, was dedicated to paying teacher retirement debt,” she said. “In turn, the State did, and continues to fund health care — as the tobacco settlement money would have — and tobacco control programs.

Tobacco taxes flow into the General Fund, said state Division of Tobacco Prevention (DTP) Director Bruce Adkins. No tobacco income is earmarked for prevention. The DTP money comes from the General Fund.

Osborne said the Legislature did this because the General Fund was viewed as a stronger and more reliable source of income than the settlement money.

“Each year, half of the state’s revenue growth goes to health care related areas. We are able to do this because we took a lump amount of money from the tobacco settlement funds and paid down other debts, such as teacher retirement and workers’ compensation.”

The costs of tobacco:

The DTP reports that West Virginia has the third highest adult smoking rate in the U.S. at 26.7 percent, and the highest rate of spit tobacco use among men at 15.9 percent.

Some costs from 2002-’06:

An average of 3,785 West Virginians age 35 and older died each year of diseases related to cigarette smoking.

About 19 percent of all deaths (or nearly 1 in 5 deaths) of adults age 35 and older were caused by cigarette smoking.

In 2006, smoking-related direct health care costs totaled $1.3 billion. This equals $3,388 per every adult smoker or $718 per every West Virginia resident.

In each year 2002-’06, productivity losses due to smoking-related deaths among adults age 35 and older, averaged $1.09 billion. This equals $2,848 per every adult smoker or $605 per every West Virginia resident.

Each West Virginia adult age 35 and older who died from a smoking-related illness represented a loss of nearly $288,000 in wages and future earnings.

While these costs are known, the Monongalia County Board of Health tabled a proposal for a countywide smoking ban in May 2008.

Monongalia GeneralHospital and RubyMemorialHospital both recently enacted smoking bans. But the Ruby ban doesn’t apply to Health Sciences property.

Dr. Christopher Colenda, WVU’s chancellor for Health Sciences, proposed a policy that would prohibit tobacco use on all Health Sciences property at a Board of
Governors meeting earlier this month. He will present the policy to the board at its next meeting.

As far as the rest of WVU, President James Clements appointed an 11-member task force to examine the university’s smoking policy earlier this month. He’s asked the task force to provide a progress report by the end of the spring semester.

The benefits of smoking programs:

CDC’s Pechacek, along with Marie Cocco and Eric Lindblum with the Campaign for Tobacco-Free Kids, say they understand the problems states are facing with revenue shortfalls — including West Virginia, which is facing a $100 million shortfall this fiscal year and anticipating decreased revenues for FY 2011.

But the question they need to ask as they balance priorities, is “What’s the best investment,” Pechacek said.

Many benefits are long range — the future health savings of keeping kids off cigarettes now. Others are immediate — reduced health care costs for kids born with smoking-related health problems, reduced costs for adults who aren’t suffering from heart attacks.

The savings can outweigh the spending on tobacco programs, he said. A California study showed a $40 savings for every $1 invested.

But even if that’s overstated, he said, what if it’s only $2 saved for every $1 spent? It’s still worth it.

He said people shouldn’t just view a tobacco tax as a “sin tax.” They should view it as a user tax, and ask if people are getting the services for their dollars.

Smokers pay the state tax, and the settlement money, he said. They may want their kids to have healthier lives. Are the states spending that money properly?

From FY 2006 to 2008, combined state spending rose from $551 million to $781.6 million. Spending has declined in the past two years: $718.1 million in FY 2009 and $642.3 million in 2010.

States can spend more or programs — and boost their general income — when they raise their tobacco taxes, said Cocco, Tobacco-Free Kids national communications director.

When the tax goes up, she said, the smoking rate goes down, but the revenues still increase.

Alaska, Tax-Free Kids data shows, raised its cigarette tax 20 cents to $2 a pack in 2007. The average price of a pack is $6.85. Sales declined 3.8 percent, but revenues increased 7.7 percent, bringing another $4.5 million to the state.

Texas in 2007 raised its tax by $1 a pack, to $1.41. a pack costs $5.23. Sales declined 21 percent, but income increased 191.7 percent, adding $1 billion to the coffers.

West Virginia ranks 43nd in state cigarette tax rates. With a 55 cent excise tax, a pack costs $4.42.

Lindblum, Tax-Free Kids director for policy research, said there’s no sign when higher cigarette taxes will cut smoking to the point income declines. “I’ve never seen that happen.”


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: