Initiative 773, it’s a losing proposition

Tom Huff &Valoria Loveland

As former lawmakers from both parties who chaired the Legislature’s budget writing committees, we have grave concerns about Initiative 773 and its impacts on our state’s fiscal health. We decided to co-chair the "NO" on I-773 Coalition after closely examining this measure. We believe voters need to be wary of what might otherwise be considered a political "slam dunk," i.e. pitting tobacco against health care for working families. I-773 doesn’t get the scrutiny it deserves because of this positioning by its proponents who spent nearly $700,000 to get this issue on the ballot and have collected over $1.1 million to promote its passage.

This issue is not about tobacco and health. Rather, we are looking at a measure that could add significant problems to our state’s budgeting process. Dedicating revenues and mandating spending priorities by initiative is a bad idea, even in the best of times. With looming economic downturns and spending limits already in effect, it spells fiscal disaster. In simple terms, the proponents of I-773 seek to expand an important health care program — the state’s Basic Health Plan — with a declining revenue source. They clearly state that they expect current tobacco excise tax revenues to decline as a result of the outrageous price increases the initiative would trigger — cigarettes would retail for nearly $ 6 a pack and chewing tobacco for $8 a can if I-773 passes.

It’s doubtful that these draconian tax increases will get people to stop using tobacco. More likely is an unprecedented surge in cross-border and illegal sales. Washington’s tax will be $14.25 a carton for cigarettes, compared to Idaho’s at $2.80 and Oregon’s at $6.80. Montana’s is at $1.80 per carton. Not to mention tribal smokeshops who don’t have to charge any state tax. All of these are within easy reach, in addition to the criminal activities by smugglers who will find any number of ways to profit from these price increases. Recent news from the state of Maryland tie such contraband activities to terrorist organizations who find it just too easy to legally buy cigarettes in one state and re-sell them in a neighboring state for huge profits.

Right now, legal retailers in our state have an outstanding record of compliance in refusing underage sales. It’s not likely that smugglers will be asking for I.D. when they ply their illegal trade. Since a number of programs, like water quality and violence reduction, depend on tobacco revenues, I-773’s proponents have devised a kind of "Ponzi" scheme by which these losses would first be made up by the new revenues the initiative would generate. Only then would any remaining funds be made available for increased enrollment in the Basic Health Plan. Actually, the way the initiative is written, there is really no guarantee that even one additional person will be enrolled in the BHP. Still, any additional enrollment that would be funded is a windfall for certain providers, like HMOs, who stand to gain millions of dollars in premiums without being held to more accessibility or better quality of medical services. In our view, that makes the "health care for working families" slogan a sham, and it probably accounts for the financial support these HMOs have given the campaign.

Most importantly, however, the I-773 scheme hamstrings the legislative budget process and sets up taxpayers at large to fund any shortfalls through the state’s general fund. With health care costs spiraling out of sight, and our economy facing a serious downturn, it’s inevitable that there will have to be general tax increases or cuts in other state programs like education, senior services and help for working families. In the end, Initiative 773 doesn’t really do what the proponents claim it does. There is no guarantee for additional enrollment. No guarantee for more access to health care. No guarantee for better quality of medical services.

The fallout of recent events makes it more important than ever to approach state budget issues in a balanced, reasoned way that allows lawmakers enough flexibility to respond to the needs of the state. This is no time for a special interest tax grab aimed at a politically unpopular minority. That’s why the Association of Washington Business and a coalition of retail and hospitality businesses urge voters to say "NO" to Initiative 773 on Nov. 6. For more information, log on to www.stopi773.com.

Tom Huff is the former Republican Chair of the Washington State House Appropriations Committee. He lives in Gig Harbor. Valoria Loveland is the former Democratic Chair of the Washington State Senate Ways &Means Committee. She makes her home in the Tri-Cities area.

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