COLUMBIA — Our elected officials under the Gray Dome really know how to lose money. First, they “elected” not to expand Medicaid to the tune of a $2 billion loss annually.
Now, because of their inaction, $69 million available through a cigarette settlement will be lost.
That $69 million could have gone to the state’s Medicaid fund or to general revenue, or … . You can fill-in the blank. It’s $69 million up in smoke. Why?
The background is simple and more than 15 years in the making. In a 1998 settlement, tobacco companies promised to make annual payments to states to help offset tobacco-related medical costs.
Stipulations of the settlement were that the state would tax off-brand cigarettes at the same rate as brand-named cancer sticks and that money would be placed in a state escrow account.
In 2014, Missouri’s share would have been close to $130 million. We are to receive about half that amount.
It seems that our state attorney general did not file legal action against the smaller manufacturers of cigarettes under the 1998 Tobacco Master Settlement Agreement.
The AG’s office “faulted poor record-keeping and communication among the attorney general’s office and the Department of Revenue, and criticized the legislature for denying the department funding to audit the tobacco companies,” the Kansas City Start reported.
In other words, as the Star explained: “Missouri officials … failed to diligently enforce the terms of the multistate tobacco settlement.”
In the greater scheme of things, the $69 million is less than 1 percent of the state’s 2014 budget. But considering that the state plans to use $64 million from our reserve fund and from facility maintenance for the budget, that money looks pretty good right now.
I don’t understand why the legislature is supporting an industry that is costing the state money. According to Tobacco Free Kids.org, the tobacco-related state and federal tax burden is almost $594 per household with a loss of business productivity of $2.51 billion.
Also at 17 cents a pack, Missouri has the lowest excise tax rates on cigarettes in the nation. And we have one of the highest rates of new smokers under the age of 18.
More than 9,600 Missourians die each year from tobacco-related illness.
How much more incentive does the legislature need?
Yes, Missouri is a “tobacco state,” but the average tax on a pack of cigarettes for tobacco states is $0.485 per pack. The average overall sales tax on cigarettes is $1.53 per pack.
Imagine what would happen if the cigarette excise tax were raised to an average level. There would be fewer smokers and lower direct and indirect health costs, plus revenue to help balance the state budget so Missouri can do what it is supposed to do — take care of our infrastructure, schools, public safety and the like.
Imagine if our state elected officials actually stood up to tobacco.
In fact, Missouri is the only one of the 46 states in the settlement without a law that prevents smaller cigarette manufacturers from having a competitive advantage. Small tobacco companies such as Edgefield and Decade are much cheaper than the big brands.
These companies pay into the state's escrow fund, then get nearly all the money back because of the failure to properly legislate a way to keep the money.
“What about HB 1242?” you may ask. The bill does not require small tobacco to catch up on the back escrow owed and tends to reduce the liability of small tobacco by readjusting the amount due to the state of Missouri.
This bill, by the way, is backed by the lobbying efforts of the Gateway Group, an organization funded by neo-conservative and Missouri native Rex Sinquefield.
So, I ask why is the health of the citizens of the state of Missouri so far down the list for our Republican friends? Why are they against anything that can provide health care and health education for our citizens? Why are they regularly rejecting money that is due the state through legislation and negotiated settlement?
I wish I could answer those questions. For a party that wants to get back to the top nationally and maintain control of the Gray Dome, they are not doing what needs to be done for the better good of the state and its citizens.
David Rosman is an editor, writer, professional speaker and college instructor in communications, ethics, business and politics. You can read more of his commentaries at ColumbiaMissourian.com and InkandVoice.com and New York Journal of Books.com.