ANNAPOLIS —- A coalition that pushed an alcohol tax increase last year is calling the tax a success and turning its efforts toward assuring that the new revenue is spent the way it was intended.

Representatives of the Lorraine Sheehan Alcohol Tax Coalition said Tuesday that the recent increase of the alcohol tax from 6 percent to 9 percent has been successful at achieving its two main goals: raising money for health care and potentially decreasing underage drinking and alcohol abuse.

Of the $70 million in expected revenue from the tax, $64 million in Gov. Martin O’Malley’s fiscal year 2013 budget is proposed for health care and community services.

The group now aims to keep the current budget plan intact as it goes to the General Assembly.

“The story’s not done, we need to convince the legislature to keep the budget as the governor proposed it,” said Vincent DeMarco, president of the Maryland Citizens’ Health Initiative.

Projections based on other states with similar increases show the tax should cause a nearly 2 percent decrease in alcohol consumption, according to testimony provided last year by Dr. David H. Jernigan, a professor in the Department of Health, Behavior and Society at Johns Hopkins University.

Most funds raised by the tax went to schools in the first year, DeMarco said.

“We were fine using some of the money for school construction because it was just one year,” he said. “Now that money is all being used for health care and community services.”

Part of the tax revenue was budgeted in fiscal year 2012 to help more Marylanders with developmental disabilities receive community service. This $15 million remains in the current plan.

This year, the governor budgeted $5.3 million to support recovery for those suffering from substance abuse, and $4 million to minimize health disparities.

O’Malley included $14.3 million for rebalancing, or favoring community-based care instead of long-term institutions.

Also included is $500,000 to support a fund for identification cards for the homeless, who need them to apply for jobs and receive necessary benefits, said Dr. Joshua Sharfstein, secretary of the Department of Health and Mental Hygiene.

Bruce Bereano, a lobbyist who opposed the tax last year, said the increase hit businesses hard.

“It really did dramatically hurt a number of small retail businesses,” he said.

However, despite these difficulties, Bereano hopes to see the revenue go toward its original intent.

“The tax was proposed for a specific reason and purpose,” he said.

ANNAPOLIS, Md. — Most of the money raised by a 50 percent increase in Maryland’s sales tax on alcohol has been allocated for health needs under Gov. Martin O’Malley’s budget, said health advocates who cheered the result Tuesday.

Vincent DeMarco, president of Maryland Citizens’ Health Initiative, said roughly $64 million has been set aside for health care purposes and the developmentally disabled.

“In sum, the alcohol tax increase money is being used for the health care and the community service programs we wanted it used for,” DeMarco said.

Last year, the General Assembly approved raising the tax on alcohol from 6 percent to 9 percent. About $15 million went to help about 500 developmentally disabled residents get off a 5,000-person waiting list to receive community services. Schools received about $47.5 million in the current fiscal year’s budget in a one-time allocation, and it was unclear last session how the money would be used in future years.

In the governor’s budget proposal, $27 million will be set aside to help the developmentally disabled, including the $15 million to continue the waiting list initiative.

About $18 million will support community health services, including $7.4 million to keep enrollment open in the primary adult care program, which covers outpatient primary care, substance abuse and pharmacy benefits. About $5.3 million will support long-term recovery and housing for substance abuse patients across the state.

Another $14.3 million will be used to expand community-based services to reduce the need to rely on institutions for long-term care.

The governor’s budget also includes $4 million to support a pilot project aimed at reducing health disparities through community-based expansions of care and services.

“We thank the governor and health secretary so much for making this happen,” DeMarco said. “Now, we’re going to work to make sure the General Assembly approves this budget.”

Copyright 2012 The Associated Press.

Copyright © 2012, The Baltimore Sun

Mr. O’Malley, a Democrat, proposed a state budget Wednesday that would raise the 15-percent excise tax on cigars, smokeless tobacco and other noncigarette tobacco items — a group collectively known as other tobacco products (OTP) — to 70 percent.

The OTP tax has gone unchanged since 1999 while the cigarette tax has gone from 36 cents to $2 a pack during that period.

Health advocates argue raising the OTP tax will reduce tobacco use and reverse a decade-long trend of underage smokers turning to relatively cheap cigars and chewing tobacco rather than more expensive cigarettes.

“This is a life-saving public health measure,” said Vincent DeMarco, president of the Maryland Citizens’ Health Initiative. “I think [the governor] just wants to have the same kind of success as he did with raising the cigarette tax.”

Mr. O’Malley led a successful effort in 2007 to double the cigarette tax, from $1 to $2 a pack, and state officials say tax increases have helped drive down smoking in Maryland by 32 percent in the past decade.

A poll last fall by the Maryland Department of Health and Mental Hygiene, however, showed many teens are turning to cigars after being priced out of cigarettes.

The governor’s proposed tax hike would raise the price of a $1.49 cigar to about $2.20. Budget analysts project the increase will bring the state an extra $20 million next year.

If the General Assembly keeps the measure in its final approved budget, it would go into effect July 1.

Mr. DeMarco, a health lobbyist who has successfully led efforts to raise the state’s taxes on cigarettes and alcohol, thinks Mr. O’Malley was swayed largely by the DHMH report and lobbying efforts.

Mr. DeMarco had planned to push for a bill in this year’s assembly to raise the tax, but its inclusion in the budget eliminates the need to do so.

The governor’s support gives the tax a stronger chance of ending up in the final budget, though tobacco lobbyists and opposing lawmakers could push for its removal.

Mr. DeMarco has said he hopes to push for another cigarette tax increase to as much as $3 a pack by 2015.

Many Republicans and business leaders have railed against the proposal and other so-called “sin taxes,” arguing they don’t curb behavior as much as they drive up costs for consumers, reduce in-state sales and force shoppers across state lines.

“It’s all about revenue and has nothing to do with actually saving lives,” said Delegate Michael D. Smigiel Sr., Cecil Republican. “The simple economics are that it doesn’t produce additional revenue. People will go to Delaware and buy their cigars, bread, milk and gas.”

Our view: Time for Maryland to do the right thing and tax cigars, snuff and other forms of tobacco at a rate comparable to the tax on cigarettes

3:06 PM EST, January 19, 2012

Cigar tax

A series of increases in the cigarette tax since 1999 has paid dividends in lower smoking rates, particularly for teens. But tobacco companies are increasingly marketing flavored cigars that are popular among minors, and taxes on those products are now disproportionately low compared to cigarettes. According to the Department of Health and Mental Hygiene¿s Youth Tobacco Survey, nearly as many teens now smoke cigars as cigarettes. The state should raise taxes on cigars and other tobacco products so they are equivalent to cigarette taxes.

By Leigh Cobb, Advocates for Children and Youth and Suzanne Schlattman, Maryland Citizen’s Health Initiative Education Fund

Maryland has just received its second Children’s Health Insurance Program Reauthorization Act (CHIPRA) performance bonus from CMS.  This recognizes its efforts to identify and enroll eligible children in Medicaid and the Children’s Health Insurance Program (CHIP).  Maryland enrolled an additional 41,000 children in FY 2011 alone, and since 2007 we have seen a 34% overall increase in enrollment.  Our bonus of $28.3 million represents the highest amount awarded by CMS this year.

Streamlined eligibility and enrollment have long been a priority for Maryland advocates. However, at the time CHIPRA passed, Maryland met 3 only of 5 required bonus criteria: it had eliminated the asset test, adopted a single, simplified application form for Medicaid and CHIP, and eliminated the in-person interview requirement.  The state had begun to recognize that many children continued to fall through the cracks and lose coverage as a result of our renewal process.  To address this, Maryland streamlined and automated the renewal process in 2009.  Still, Maryland had to take one more step to become eligible for a CHIPRA performance bonus.

In 2008, Maryland had passed the Kids First Act creating a national model.  Under the legislation, the state tax forms included a question to determine if dependent children had health care coverage.  A combined Medicaid/CHIP application was then sent to all families with incomes under 300% of the federal poverty level who indicated lack of coverage for their children. The State then recognized the need to create even more targeted outreach.  In 2010, with substantial support from the advocacy community, the legislation was modified to facilitate better coordination between the Comptroller’s Office and the Department of Health and Mental Hygiene (DHMH).  At the same time, it added a separate opt-in provision to the tax form.  These steps led to the realization of true “express lane eligibility” and allowed the State to apply for and receive its first CHIPRA bonus.  The State also piloted another express lane eligibility effort that uses Free and Reduced Meals (FARMS) program applications in Baltimore City.

The substantive expansion in enrollment in 2011, made Maryland eligible for this year’s Tier 2 bonus–because it increased enrollment more than 10 percent above the target level needed to earn a bonus.  Commenting on the latest performance bonus and the lessons learned from child enrollment efforts, DHMH Secretary Dr. Joshua Sharfstein said, “We have a great foundation for further progress with the Health Benefit Exchange”.

This second performance bonus will support Maryland’s ongoing efforts to make sure that all eligible children get enrolled in Medicaid and CHIP, and can then access the full range of health services they need.

In a recent Baltimore Sun article about our proposed tax increase for cigars and smokeless tobacco designed to reduce teen use of these products (“Group pushing tobacco tax says it’s a popular idea,” Dec. 20), Bill Spann of the cigar industry makes the irrelevant point that teenagers don’t smoke expensive cigars. The fact is that according to a study recently released by the Department of Health and Mental Hygiene, 14 percent of children now smoke the kind of inexpensive cigars that the cigar industry has been marketing with kid friendly flavors.

While cigarette smoking among children (and adults) in our state has declined dramatically (double the national average) largely as a result of our recent cigarette tax increases, saving thousands of lives from tobacco caused preventable death, cigar smoking among children has been on the rise in part because we have not increased the tax on these deadly products since 1999. The time has come to build on our success in reducing cigarette smoking by increasing the tax on cigars and smokeless tobacco so that we can save even more lives from tobacco addiction.

That is why a poll by OpinionWorks that we recently released showed that 72 percent of Marylanders join us in calling upon the General Assembly to increase the tax on cigars and smokeless tobacco so that it is equivalent to the tax on cigarettes.

Vincent DeMarco, Baltimore

Two-thirds of Maryland voters support increasing the state’s tobacco tax, according to a new poll from the Maryland Citizens’ Health Initiative, the group that pushed the dime-a-drink tax on alcohol last General Assembly session.

The group says their poll by Opinion Works shows 65 percent endorse the idea of another $1 a pack tax on cigarettes while less than 30 percent oppose it. About 72 percent of Maryland voters like the idea of taxing cigars and smokeless tobacco at the same rate as cigarettes. (The phone poll of more than 800 people was conducted last week.)

The group believes increasing the tax will cut consumption and fund health care programs, especially among youth who have adopted the use of cigars, especially flavored one. As of 2010, 15.2 percent of adults and 14.1 percent of high school students in Maryland were smokers.

The U.S. Centers for Disease Control and Prevention say smoking and secondhand smoke cause 443,000 deaths and $96 billion in related disease annually – or $10.47 per pack consumed if lost productivity is counted. The average price nationally for cigarettes is about $5.58.

“Increasing taxes on cigars and smokeless tobacco is a public health imperative,” said Vincent DeMarco, president of the Maryland Citizens’ Health Initiative, in a statement. “The people of Maryland strongly support this because they know doing so will reduce the use of these deadly products by young people.”

What DeMarco doesn’t have is the support of the leadership in Annapolis. The extra buck would bring the total in taxes to $3, among the highest in the nation. The tax has been raised three times in 1999, mostly recently in 2007.

GAZETTE
This story was corrected on Dec. 13, 2011. An explanation follows the story.
by Sarah Breitenbach, Staff Writer

A proponent of increasing Maryland’s tax on cigarettes doesn’t expect the proposal to get much support in the 2012 General Assembly, but he hopes lawmakers will see fit to raise the cost of cigars and other tobacco products.

Vincent DeMarco, president of the Maryland Citizens’ Health Initiative, said political leaders in Annapolis aren’t interested in tackling a cigarette tax this year, but recent polling shows voters would support boosting taxes on other tobacco products.

Polling data, collected on behalf of DeMarco’s group by Maryland-based pollster OpinionWorks, suggest that 72 percent of voters would support — 54 percent, strongly — increasing the tax on the tobacco products to be comparable with Maryland’s current $2-per-pack cigarette tax.

DeMarco wants funds from a tax increase to be used for the state’s tobacco control program as well as community-health programs that target childhood obesity, longterm care for senior citizens and access to health services.

An excise tax on cigars and smokeless tobacco products wasn’t created until 1999, when the legislature imposed a tax at 15 percent of the wholesale price.

The tax on cigarettes was last raised by $1 in 2007.

Although cigarette smoking in Maryland has declined by 32 percent in the past decade, DeMarco argues that taxes on cigars and smokeless tobacco should be on par with the state’s cigarette tax.

“Youth use on those products has gone up so there’s an urgent need to do something now on cigars and smokeless [tobacco],” DeMarco said. “We understand the cigarette tax might take a little longer.”

Still, DeMarco hopes to see legislation introduced in 2012 that would target cigars and smokeless tobacco as well as cigarettes.

He expects Montgomery County lawmakers Del. Sheila E. Hixson (D-Dist. 20) of Silver Spring and Sen. Jennie M. Forehand (D-Dist. 17) ofRockville could sponsor the tax legislation.

Both legislators have sponsored versions of the bill in previous sessions.

Because he doesn’t expect lawmakers to go for a tax on cigarettes in 2012, DeMarco said his group will make the cigarette tax a campaign issue in 2014, asking General Assembly candidates to sign on to support the measure before voters even get to the polls.

That election-year tactic is one DeMarco routinely uses to get weight behind his issues.

In 2010, he asked potential lawmakers to commit to raising the state’s tax on alcohol.

Although his initial proposal stalled, the legislature eventually passed a 3-cent hike on the alcohol sales tax earlier this year.

The story had an incorrect figure for the percent of voters that would support increasing the tax on tobacco products.