Tobacco War: "d0e1390"

The Legislative Effort

The next step in the tax effort was to attempt to pass a tobacco tax increase through the Legislature. Connelly's invitation letter to the December 4, 1986, meeting of the Coalition stated, “While we are planning to make an initial effort at the Legislature, we frankly expect the tobacco lobby will defeat us there. After all, they've been doing so for 20 years.”^[5] Still, a legislative attempt was necessary to develop the Coalition further, to test the various arguments for a tobacco tax increase, and to educate

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the public regarding the desirability of an increase. The process also was designed to improve the drafting of the initiative by exposing it to public comment. In addition, the process of going through the Legislature provided some hope of a compromise with the tobacco industry before an initiative battle had to be faced.^[3] It was also necessary, before going to the voters, to try the legislative approach and demonstrate that it simply would not work.^[11]

As predicted, the Coalition had to contend with the tobacco industry's lobbying power in the Legislature. Despite the industry's very low public credibility and the popularity of the tax increase on cigarettes, the industry had been very successful in defending its political agenda within the Legislature through large campaign contributions to legislators and its organized and politically influential lobbyists.^[12–14] According to Hite, the Coalition tried to persuade the tobacco industry to let the bill go through, but without success: “We did our best to tell the tobacco folks, `We're going to do this, we're going to do an initiative on this, and we've got right on our side and you know we've got the numbers on our side, you know we're right, we're going to win this. Cut your losses and let's do legislation.' And they wouldn't.”^[6]

The Coalition decided to seek a constitutional amendment rather than a simple statute for two reasons. First, proponents of the tax increase wanted to avoid spending limits that the voters had enacted in 1979 when they passed Proposition 4, known as the Gann Limit (after Paul Gann, its primary sponsor). This constitutional amendment, which was passed the year after Proposition 13, limited the growth of state government expenditures to the rate of inflation and population growth. While the Gann Limit did not prohibit an increase in the cigarette tax, it could have prevented the state from spending the money raised by the tax.^[15] Second, proponents wanted to protect the tax-funded tobacco education programs from the Legislature, and only the voters can change a voter-passed initiative. Assembly Member Tom Hayden (D-Santa Monica) realized that protecting Proposition 99 would be an ongoing battle. Hayden had gained fame as a leader in the antiwar movement of the late sixties and early seventies as a member of the Chicago Seven. He eventually channeled his energy into mainstream politics and, in addition to becoming a member of the Legislature, founded Campaign California, which pushed a variety of liberal, environmental causes, including several ballot initiatives.^[16] Hayden would become one of Proposition 99's defenders in the Legislature.

Since the proponents of the tax increase were certain of defeat in the

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Legislature, they wanted to craft the proposed tax initiative to draw maximum public support. With money from the CMA, ACS, and ALA, they hired Charlton Research to conduct a public opinion poll in January 1987 on the topic of raising the tobacco tax.^[17] The Coalition sought public input in five major areas: the amount of the tax, the breadth of the tax, the distribution of the new revenues, the issue of whether to adjust for inflation, and ways around the Gann Limit.^[18]

The poll found substantial public support for a cigarette tax increase of twenty-five cents a pack (to a total of thirty-five cents): 73 percent supported the increase (57 percent strongly, 16 percent somewhat) and only 23 percent disapproved of it. Even after hearing the arguments for and against a cigarette tax increase, support remained high—at 68 percent. Nearly two-thirds of the respondents said they would be likely to vote for the tax increase for the following reasons: tobacco use costs society billions of dollars, increasing the tax would discourage smoking among young people, and tobacco use is the single most preventable cause of death in America. And 42 percent said they would be more likely to vote in favor of a tax increase if they knew large out-of-state cigarette companies would contribute millions of dollars to oppose the initiative. Arguments against the tobacco tax were less persuasive. The most popular argument against the tax—that increased cigarette taxes mean another government bureaucracy and more bureaucrats spending more tax money—made 46 percent of the respondents less likely to vote for the tax.^[17]

The poll provided the Coalition with public feedback and helped to influence how to allocate new revenues from the tax increase. Funding education programs to prevent drug and tobacco abuse was the most strongly supported (72 percent), followed by health research on tobacco-related disease (60 percent), MediCal (Medicaid in California; 42 percent), and increased funding for parks and wildlife (20 percent). The results of the poll were significant for two reasons. First, they clearly demonstrated that the tobacco tax had overwhelming public support. Second, they clearly showed that funding prevention and education was more popular than funding health care services. The Coalition decided that the bill would allocate revenues to three major types of programs: reducing smoking, mitigating the health impact of smoking, and mitigating the nonhealth impact of smoking.

On February 23, 1987, Connelly introduced Assembly Constitutional Amendment 14 (ACA 14), cosponsored by Assembly Member William Filante (R-Greenbrae), a physician, to increase the tax on cigarettes from

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ten cents to thirty-five cents per pack, with comparable taxes on other tobacco products. By April 1987, ACA 14 addressed the Gann Limit and the allocation of revenues. ACA 14 stipulated that the new revenues raised by the tax would be allocated as follows: tobacco use prevention (47.5 percent, with 27.5 percent for school health promotions aimed at reducing cigarette smoking and substance abuse and 20 percent for community-based smoking prevention activities); augmentation of MediCal funding for the treatment of lung cancer, chronic obstructive lung disease, heart disease, and other tobacco-related illnesses (27.5 percent); clinical research on the diagnosis and treatment of tobacco-related diseases (15 percent); and efforts by various local and state jurisdictions to mitigate the nonhealth impact of tobacco use such as fires and litter (10 percent). The allocation of revenues roughly paralleled the Charlton Research poll results: education and prevention were favored over health care services, and environmental programs were given the lowest priority. Only the research allocation did not reflect the public's preferences as shown in the poll (being placed third instead of second).

The bill's proponents were not the only ones planning strategy in the spring of 1987. By March, the tobacco industry, far from considering a compromise with Connelly, was actively planning its opposition. The Tobacco Institute had commissioned Houston-based V. Lance Tarrance to conduct a private poll to measure public opinion regarding a tobacco tax increase and to develop the tobacco industry's political strategy to defeat it. In the polling results, the initiative was winning 63 percent to 30 percent, with 6 percent undecided.

Like the Coalition poll, the Tobacco Institute poll tested various arguments and issues to determine potential weaknesses and strengths of the tobacco tax increase. The results were not encouraging for the tobacco industry:

The data strongly indicate that a campaign for fighting the tax increase will not be received well by voters. Convincing voters that the tax level is already too high, and stressing the importance of the Gann Spending Limit law may be possible, but the bottom line is that people do not like smoking or smokers. Therefore, anti–cigarette tax support should not be expected to rise substantially from the levels they are now. The single chance the anti-tax campaign has is to move this issue away from smoking. These data show moderate levels of support for a campaign constructed around the following themes: (1) Increased taxation— any tax increase is bad; (2) Government mismanagement of tax money; (3) Scheme to “bust” the Gann Spending Limit [and] get around state spending law; (4) 25 cents a pack is too much on a single product—
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unfair. Realistically, these themes could win, if backed by a broad coalition of anti-tax people. …Even with such a coalition, the “no” campaign would be expensive and difficult given the very negative feelings against smoking.^[19] [emphasis in original]

Many of these themes were to appear in the tobacco industry's election campaign against Proposition 99.^[20] In fact, the industry named its front group Citizens Against Unfair Tax Increases.

Although Coalition leaders doubted that the Legislature would approve ACA 14, they mounted a genuine effort to build public support. Mekemson outlined their strategy: “We could generate a lot of media around it, and that would be the beginning of our sort of push to the public. We also felt that it would be an opportunity to take some of the concepts and ideas that we had developed and throw them out on the table to see whether they would float or not. We also felt that it would be a way of beginning to sort of feel the tobacco industry out and take a look at what their strategy would be and arguments.”^[1]

In late April, the Coalition held a series of press conferences about ACA 14, the Coalition, and the tobacco tax effort. The Coalition released its poll data showing overwhelming support for the tobacco tax,^[21] and Assembly Members Connelly and Filante held a press conference in Los Angeles at which Patrick Reynolds (grandson of R. J. Reynolds) testified in support of ACA 14.^[22] In early May the independent California Field Poll showed that two-thirds of those surveyed supported increasing the cigarette tax by as much as thirty cents per pack.^[23] The ALA and ACS were also active throughout the spring of 1987, sending action alerts to local affiliates and urging legislators to vote for ACA 14.^[24]^[25] Connelly was cynical about the likelihood of legislative action but pushed it so as to move the initiative process forward.

The tobacco industry took ACA 14 more seriously than Connelly did. A discussion of how to defeat ACA 14 consumed most of a meeting of the Tobacco Institute's State Activities Policy Committee on April 3, 1987, in Washington, DC. According to Gene Ainsworth of RJ Reynolds, ACA 14 received this extensive attention because “given the size of the California cigarette market (9.7 per cent of total domestic volume), and California's political bellwether position, the specter of a state-wide initiative to increase the cigarette excise tax is a most serious situation.”^[26] The Tobacco Institute State Activities Policy Committee gave specific directions to its lobbyists to keep the tax issue off the ballot through both the legislative and initiative processes. The group also

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clearly identified the CMA as an important player to be neutralized if the industry was to avoid an initiative fight over the tobacco tax. Ainsworth observed, “It is clear that the money machine for the Coalition's California tax proposal is the California Medical Association. Without the promised $1 million from the CMA, the tax initiative would be difficult to qualify and we could possibly avoid a costly and extremely difficult state-wide tax battle in 1988.”^[26]

Between April 15 and May 18, a Sacramento lobbying firm representing the tobacco industry, A-K Associates, mounted a major and wide-reaching campaign behind the scenes to stop ACA 14. The firm's report to Roger Mozingo, head of the Tobacco Institute's State Activities Division in Washington, catalogued these activities.

The California Chamber of Commerce, California Taxpayers Association, California Retailers Association and California Manufacturers Association all were recruited and went on record as being opposed to ACA 14. This allowed us the opportunity to meet with and brief the “key” people within each of these groups in order to educate them about ACA 14 and the possible statewide initiative. These groups are now on record and can be expected to be a valuable resource if needed to actually fight an initiative.
Hispanic Lobbying Associates was retained to generate Hispanic opposition to ACA 14. The Mexican American Political Association, American G.I. Forum, Latino Peace Officers Association, California Hispanic Chamber of Commerce, California Hispanic Women's Forum and the Latin American Pacific Trade Association all officially went on record in opposition to ACA 14. These groups are still with us awaiting our signal to be turned loose against the tax Initiative.
A very successful letter writing campaign to “key” legislators by companies and TI [Tobacco Institute] was orchestrated and effectively carried out.
Personal lobbying of organized medicine began even during the lobbying efforts on ACA 14 in the Legislature. These included personal meetings with the following California Medical Association Leaders:

Bob Elsner, Executive Director.
Jay Michael, Director of Government Relations.
Dr. Gladdin Elliott, Immediate Past President.
Allen Pross, CALPAC Director.
Dr. Kai Kristensen and Dr. Phillips Gausewitz, San Diego area.
Frank Clark, Executive Director of the Los Angeles Medical Society.
Dr. Manny Abrams and Dr. David Olch, Los Angeles area.
Dr. Frank Glanz and Dr. Marshall Ganns, Orange County area.
Dr. Ed Hendricks and Dr. Pierce Rooney, central valley area.

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Dr. Michael Lopiano, Santa Barbara area.
Dr. Paul Dugan, northern California rural area.
Dr. Tom Elmendorf and Dr. James Moorfield, Sacramento area.
Dr. Fred Achermann and Dr. Roberta Fenlon, San Francisco area.

Met with “key” black political leaders to solicit and begin solidifying black support among state legislators for the anti-initiative campaign. We met personally with the following black state legislators or legislative staff:

Willie Brown, Speaker of the Assembly.
Maxine Waters, Majority Whip.
Curtis Tucker, Chairman of the Assembly Health Committee.
Dodson Wilson, Staff to Speaker Willie Brown.

Met with David Kim re Korean community and advise [sic] re other possible Asian consultants.
Met with Assemblyman Dick Floyd, Tommy Hunter (Calif. State Pipe Trades) and Jack Henning [secretary-treasurer of California AFL-CIO] regarding the proposed tax initiative.
Met continuously with Jack Kelly [regional vice president of the Tobacco Institute] to coordinate testimony and lobbying activity.^[7]

The tobacco industry got its way in Sacramento. When ACA 14 came before the Assembly Revenue and Taxation Committee on May 18, only seven of the committee's sixteen members showed up (two short of the necessary quorum), precluding any action on the bill.^[27] Committee chairman Johan Klehs (D-San Leandro) did not even allow supporters of ACA 14 to testify.^[15] Assembly Member Dick Floyd (D-Wilmington) marched up and down the aisles blowing cigar smoke at supporters of ACA 14. The tobacco industry's contract lobbyist, A-K Associates, declared victory:

In order to accomplish our anti-initiative strategy to discourage support for the pro-initiative coalition, we felt it was imperative to attain a decisive victory in the first committee to show strength and resolve on the part of the opponents to the proposed tax increase. In fact, when these two bills were heard before the Revenue and Taxation Committee, they were dealt a “crushing” defeat. Neither received a motion, much less a single affirmative vote.
Our major goal of weakening potential support and showing strong opposition was certainly accomplished. The California Medical Association was shocked that their intense lobbying effort could not receive one “aye” vote in the Committee, considering their campaign support for the members
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of the Revenue and Taxation Committee (Organized Medicine—$80,300 vs. TI—$17,750 during 1986). The minutes of the proponents' June 17, 1987 organizational meeting even makes reference to this defeat.^[7]

The motion to propose ACA 14 died for lack of a second.