Special session sparks tobacco tax debate

MAT-SU -- As they predicted, legislators were in and out of the special session called by Gov. Frank Murkowski in three days flat, and the governor's Percent of Market Value plan remains on the shelf, and will likely die with other unresolved legislation as the session ends.

Legislators did pass one measure during the special session; a cigarette tax that will begin at an additional 60 cents per pack, increasing over four years to a dollar per pack. Alaska smokers already pay $1 per pack in cigarette taxes.

Valley legislators are split over the tax -- Representative Carl Gatto, R-Palmer, voted in favor, while Reps. Vic Kohring, Beverly Masek and Bill Stoltze, and Senator Lyda Green voted against it.

Gatto said for him, the tax was about reducing smoking.

"For me, it's not a revenue bill. For me, it's a kids smoking bill," Gatto said. "The goal is for me, if you can do something to prevent a kid from starting, you've done a great deal."

Gatto said he had prepared to offer a sunset to the legislation after four years, but other legislators had agreed to consider the bill as-is, only, and threatened to pull their support if amendments were offered. He said he hopes to get a chance to reconsider the bill in four years and, if there's insufficient proof the tax has led to lower rates of teen smoking, he'd like to ask that it be repealed.

The tax will raise an estimated $35 million in revenue, and it's estimated to cost about $200,000 to enforce. Of that revenue, $4 million is set aside for grants and loans for tobacco use prevention programs.

Green said kids smoking or not, she felt the bill crossed a line. A portion of the bill includes language that would make it possible for the state to require someone caught transporting unstamped cigarettes in an airplane or any other mode of transportation. She said she also feels the tax targets low-income Alaskans, who have a higher smoking rate.

"Suddenly it's OK to tax people who're at the bottom end, and don't have an advocating voice," Green said. "I think it's ironic to tax the people at the bottom end, to fund governmental functions."

Green said she felt very conflicted about the bill. As a previous smoker, and someone whose father died as a result of illness aggravated by smoking, she said she understands it's a health risk, but sees the bill as a social measure.

"If it's social engineering and education, then it's a punitive fine, not a tax -- call it what it is," Green said. "Tobacco products have been taxed a dollar a pack already, and that's a huge amount. If we're doing this to raise money, then we should find other products."

Kohring agreed, and said he believes legislators shouldn't dictate social policy.

"I think it was a bad bill," Kohring said. "I am not convinced we're going to make major inroads as far as keeping kids off cigarettes. I'd rather do that by encouraging more education in schools, more parental involvement."

Kohring said he found it laughable that a Republican-controlled legislature went to Juneau and the sole item they acted on was enacting a tax. He said there was one issue on the floor during the session he would have supported -- a spending cap. That bill didn't move during the session, however. Neither, Kohring said, did the governor-proposed Percent of Market Value plan. The House had passed the plan through a narrow vote during the regular session, but the Senate didn't act on it. At the special session, the Senate still refused to take up the POMV plan and, as a result, neither did the House. Kohring said he didn't support the plan when it first passed the House, and he wouldn't pass it if it had come up again, but some legislators are concerned not passing the plan could lead to implementation of the governor's "Plan B," or doomsday budget, which proposed severe cuts in several areas, and would have resulted in the Legislature not funding its match for school-bond projects passed last year. Kohring said he's heard a lot of legislators speak of concern about the budget, but he doesn't see it as all that bad.

"Yes, a lot of legislators are concerned about that, because a lot of legislators do not want to see spending reductions," Kohring said. He added that he, on the other hand, doesn't have much of a problem with the doomsday budget, which would make cuts in several areas and consolidate state offices and services.

"I think there are a lot of elements in that budget that are good," Kohring said.

Green and Kohring both said they foresee a POMV-type bill being reintroduced when the next legislature session begins, but neither plan to vote in favor of it. Kohring said he has never -- and won't -- support spending part of the permanent fund for government.

Green said she could abide with a protection of the dividend in the state constitution, but would rather see a formula-related protection, not a specific amount.

"I think it's okay for the amount of the dividend to fluctuate, and go as high as $2,000, or as low as several hundred," Green said. "What if we haven't earned $1,000 per person in earnings? Then we're holding the dividend higher than education, roads … I want the dividend to come from a dividend."

Green added that, with nearly $2.5 billion in the state's constitutional budget reserve and another $4 billion in earnings reserve, it's difficult to convince legislators -- or Alaskans -- that the state is in dire straits.

"It's hard … to say there's a crisis and we have to do something that could impact the way we do government," Green said. "We can't keep claiming there's a crisis when we have enough money sitting there in an emergency."

Contact Rindi White at rindi.white@frontiersman.com.