Gov. Sam Brownback proposed significant alcohol and tobacco tax increases in January to help close a budget gap.
By that time, the alcohol and tobacco industry had combined to give almost $40,000 in the last two years to aid the re-election campaigns of the 34 legislators on the House and Senate tax committees that would vet the proposal.
Washburn University political science professor Bob Beatty said those donations don’t entirely explain why legislators have thus far rejected the governor’s proposals.
But they’re part of the equation.
“It’s not that immediate jump from, ‘This legislator got a donation, so they’re going to vote a certain way.’ But donations will help groups or people get access,” Beatty said. “It may be a phone call or maybe an actual meeting.”
Kansas has strict limits on how much a company or individual can donate to a campaign in a single election cycle, and the tobacco and alcohol contributions make up a small fraction of the total cash received by tax committee members.
But Beatty said “even relatively small donations will get you access.”
“Then it’s up to the group to get their message across,” he said.
Those delivering the message this session include lobbyist David Kensinger, the governor’s former chief of staff, who was hired by Reynolds American Inc. (RAI) after getting a preview of Brownback’s budget proposal.
Beatty said Kensinger’s involvement with the nation’s second-largest tobacco company combined with Brownback’s lukewarm endorsement of the tobacco tax could cause legislators to question how seriously the governor wants it passed.
“Let’s just say it’s not John Carlin out there stumping for the severance tax,” Beatty said of the former Democratic governor who successfully campaigned for a controversial tax on oil, natural gas and coal in 1982.
Industry’s anti-tax message ‘appealing’
Brownback made the tobacco and alcohol proposals as part of a plan to close a state general fund budget gap for the next fiscal year that has burgeoned to about $422 million even after spending adjustments and one-time transfers from other funds.
The budget deficit comes after large income tax cuts were passed in 2012.
Beatty said Republican Gov. Bill Graves faced a similar situation in 2002 and managed to push through a large cigarette tax increase to help close the gap then.
Brownback is working from the same playbook but has different teammates who aren’t as enthusiastic about executing the play.
The Legislature is more conservative now, and more anti-tax. And the memory of legislators being targeted by small-government interest groups after voting for a 2009 sales tax increase is relatively fresh, Beatty said.
That lays the groundwork for legislators to be receptive to the tobacco and alcohol industry’s message that they shouldn’t be taxed further.
“Access plus an appealing message is, I think, is in play here,” Beatty said.
Alcohol industry spending
The four percentage point increase in the alcohol enforcement tax, estimated to bring in about $27 million, has not been strenuously promoted by anyone, despite recent research that suggests such increases can reduce public health problems like drunken driving and sexually transmitted diseases.
That void has allowed an industry already engaged in state politics to shape the debate.
Anheuser-Busch donated to the campaign accounts of nearly all the tax committee members. Liquor store owners, involved in a years-long struggle with grocery stores over the exclusive rights to sell full-strength liquor, donated heavily to several members.
One member of the House Taxation Committee, Topeka Republican Rep. Ken Corbet, received donations from 30 liquor stores in the past two years.
Corbet, who owns a hunting and sport shooting lodge, said his opposition to the alcohol and tobacco taxes are rooted more in his sympathy for the small-business owner than his campaign coffers.
“Most of the emails and phone calls I have gotten from my constituents, they are not much in favor of those taxes,” Corbet said. “And, basically, if I had a convenience store on the border, boy, that would be tough.”
Tobacco tax tabled
The cross-border shopping argument has been particularly prevalent because Missouri has the nation’s lowest tobacco tax.
Legislators have said that’s part of their hesitancy to embrace Brownback’s proposal for increases of $1.50-per-pack on cigarettes and 25 percent on smokeless tobacco, projected to garner about $80 million.
In the absence of sustained pressure from Brownback, anti-tobacco organizations and other public health groups have taken the lead in promoting the taxes. They say the proposals would generate urgently needed revenue while also saving lives and saving health care costs by convincing people to quit tobacco or never start.
“We’re not trying to raise $10,000 for a bake sale. We’re trying to get the budget for the state of Kansas fixed.”- Sen. Les Donovan, a Wichita Republican who chairs the Senate Assessment and Taxation Committee
But members of the Senate Assessment and Taxation Committee voted to table the tobacco tax Tuesday, one day after health advocates rallied for it at the Statehouse.
Sen. Les Donovan, a Wichita Republican who chairs the committee, expressed surprise at the vote. Donovan had told committee members the week before that if they could not agree on the full tobacco tax, he would propose amendments for smaller increases to try to squeeze out some much-needed revenue.
“It would have been nice if we had had an opportunity to explore that,” Donovan said after the hearing. “That did not happen. I’m going to talk to the folks that were involved in getting that tabled.”
Donovan said he could not speculate on what role the tobacco industry’s lobbying or campaign cash might have played.
RAI donated a total of $1,000 to four members of the Senate tax committee in the last two years. Altria, the parent company of Philip Morris and the nation’s largest tobacco company, donated $5,500. Swedish Match, a manufacturer of smokeless tobacco, donated $1,000. Eighteen of the 23 members of the House Taxation Committee received a campaign donation from at least one of those three companies.
Jodi Radke, regional director of the Tobacco-Free Kids Campaign, said such donations are the norm in statehouses across the country.
“We hope that’s not a factor,” she said. “We hope legislators are able to separate the dollars they receive from the policy decisions they make, but we know that’s not always true.”
Sen. Jeff Melcher, a Leawood Republican who was part of the vote to table the tobacco tax, said his opposition had nothing to do with campaign donations.
“I couldn’t care less who gives me checks,” he said. “Checks don’t drive my policy; my policy is what drives interest for people to donate to my campaign. I think you’ll find it’s probably that way for many legislators.”
Melcher has been outspoken this session about his desire to see Kansas’ rural areas take on more tax burden. He said to get his support, any tax plan would have to include an excise tax on property, paid per acre owned.
The Senate tax committee’s latest move makes the increases even more of a long shot. But Donovan said committee members will be forced to reconsider a lot of proposals as they work to craft a compromise tax bill.
“I don’t think everybody’s on board with how dire our time schedule is,” he said. “It is getting very critical that we get something moving, that we get something done. We’re not trying to raise $10,000 for a bake sale. We’re trying to get the budget for the state of Kansas fixed.”