Californians Beware: Proposition 29 is Government Waste at its Finest

In this critical election year, Americans will not only cast their votes for elected officials at all levels of government including President of the United States; they will also decide on several state ballot initiatives. Some of these votes will be cast long before November 6. Californians, in particular, will have an expensive and wasteful idea on their June 5 ballot: Proposition 29.

Carefully packaged as a cancer research initiative, there is more to Prop 29 than meets the eye. The measure would place a $1 levy on each pack of cigarettes sold in California, raising an estimated $735 million annually. This “rob Peter to pay Paul” scheme would create a new state commission that will be governed by a nine-member board comprised of university, cancer center, physician and advocacy group representatives. These political appointees will be allowed to spend $110 million annually on office space and facilities, plus an additional $15 million on consultants, salaries and travel. These commissioners will be totally unaccountable to taxpayers since Prop 29 specifically prohibits the Governor, Legislature and even the state auditor from making changes to the initiative for 15 years, even in the case of fraud or waste.

The lack of transparency and accountability for this new cancer research commission is not the only troubling fact about Prop 29. The 4,000-word measure provides no requirement that the money raised stay in the state. This means that Californians may end up funding projects and creating jobs in other states at their own expense.

The federal government already spends $6 billion annually on cancer research and the state of California already funds $70 million per year on anti-tobacco programs. Creating a duplicative program would not only be extremely wasteful, it would burden Californians with the responsibility of funding medical research that ultimately benefits everyone in the country. Cancer research has been and should continue to be funded by the federal government, non-profit organizations, and private companies.

Additionally, California, which is infamously recognized for its massive budget failures, has many unmet needs. An April 27, 2012 Los Angeles Times op-ed noted, “California can’t afford to retain its K-12 teachers, keep all its parks open, give public college students the courses they need to earn a degree or provide adequate home health aides for the infirm or medical care for the poor. If the state is going to raise a new $735 million, it should put the money in the general fund rather than dedicating it to an already well-funded research effort.” It is clear that California has misplaced priorities if it chooses to spend money creating duplicative programs at the expense of other services.

Raising taxes to create a superfluous program is government waste at its finest. History has shown that raising excises taxes does not produce projected revenue, as such tax increases drive purchases across state lines or to untaxed or lower-tax venues, like Native American territories and the Internet. When California increased its cigarette excise tax by 50 cents in 1999, taxable cigarette sales dropped by 26 percent in two years.If the tobacco tax revenue envisioned under Prop 29 fails to materialize, which is inevitable, politicians in Sacramento will end up raising even more taxes to make up the shortfall.
 

Increasing cigarette taxes will also have a depressing effect on California consumers and small businesses. The Congressional Budget Office has reported that cigarette excise taxes are the most regressive type of excise tax and disproportionately impact the poor and those living on fixed incomes. Additionally, raising cigarette taxes, especially during a weak economy, will slow business and negatively impact state retailers. According to the National Association of Convenience Stores, cigarettes are the top revenue generator, accounting for 35.9 percent of in-store sales nationwide.

Prop 29 will burden consumers with higher taxes in the name of cancer research; meanwhile government bureaucrats will be allowed to spend taxpayers’ hard-earned dollars on a duplicative and unnecessary program without any accountability. Americans know government waste when they see it. This June, Californians will see it on their ballots and vote ‘NO’ on Prop 29.

– Erica Gordon