WHEN is good news also bad news? When people stop engaging in unhealthy behaviors that state government relies on for funding.
The dramatic decline in smoking in Oklahoma last year is good news for public health, but signals that state government may have to wean itself off tobacco tax much faster than anticipated. Figures released by the Centers for Disease Control and Prevention indicate 23.3 percent of Oklahoma residents smoked in 2012, down from 26.1 percent in 2011.
Oklahoma now ranks 39th nationally for its rate of adult smoking. That doesn’t sound so great until you consider that Oklahoma ranked an abysmal 47th just last year.
Although users shifting to e-cigarettes may artificially increase the decline, CDC and census data indicate there were about 75,000 fewer adult smokers in Oklahoma in 2012 than 2011.
The percentage of Oklahomans who’ve never smoked rose from 49.2 percent to 52.4 percent, an increase of about 100,000 people. The percentage who smoke every day fell from 19.9 percent in 2011 to 17 percent in 2012. This is reason to celebrate.
But for Oklahoma government, smoking reduction translates into less revenue. There were 14 million fewer cigarette tax stamps sold last year, a 5.2 percent drop. In the past decade, the number of cigarette packs sold has decreased by 100 million overall, according to the Health Department.
We have long noted government can do more with less, and in many cases it should simply do less. But tobacco taxes are now embedded in the foundations of many government programs.
The first 23 cents in tax on each pack of cigarettes goes to the state’s sinking fund to repay bonds. The revenue generated by an 80-cent increase that voters approved in 2004 supports multiple health uses, general government expenditures and local governments.
Seventeen percent of the 80-cent tobacco tax increase goes to the state general revenue fund, which can be tapped for a wide range of uses, including schools, public safety and roads. Another 14 percent of the 80-cent tax increase goes to counties and cities to replace a sales tax repealed in 2004.
From 2001 to 2012, the adult smoking rate in Oklahoma has fallen by nearly 19 percent. The 2012 figures indicate that the decline may be accelerating. Yet Oklahoma governments’ dependence upon tobacco tax has increased.
If smoking declines gradually, lawmakers can easily adjust to revenue changes. But if the decline speeds up, replacing that lost revenue without cutting publicly favored programs becomes far more challenging. The impact on local governments, already overdependent upon unpredictable sales tax collections, could be especially jarring.
Gov. Mary Fallin is currently renegotiating tobacco compacts to ensure that all retailers collect the full $1.03 per-pack tax. Instead of giving tribal smoke shops lower tax rates, she proposes one rate for all and rebates for tribal governments.
In the short term, Fallin’s plan could ease government’s financial strains by effectively boosting the amount of tobacco tax collected from the dwindling supply of smokers. In the long run, her efforts will increase price pressures on smokers and encourage even more citizens to kick the habit, which is good. Her efforts could buy Oklahoma policymakers time to determine how to smoothly transition away from dependence on certain-to-decline tobacco tax collections.
A growing number of Oklahomans are kicking their nicotine addiction. It may be time for Oklahoma government to do the same.
