Virginia’s involvement in SLS helped to bring tobacco farming interests and tobacco control advocates together in the Southern Tobacco Communities Project , which led to the “Core Principles Statement Between the Public Health Communities and the Tobacco Producers,” a memorandum of understanding between regional farming and tobacco control interests on the tobacco control policy areas that the farming interests represented by the STCP would support.Advocates and farmers agreed that a significant infusion of money be made available to tobacco growing communities. They also agreed that tobacco products should not be marketed or sold to minors, that a portion of federal cigarette excise taxes should be used for public health initiatives if a portion is dedicated to farming communities, and that the “prohibition of the use of tobacco products by informed adults of legal age is not a goal of the public health advocates or tobacco producers.”The understandings embodied in the Core Principles led both health advocates and farmers to support the division of MSA funding between tobacco community revitalization and youth tobacco prevention programming. This agreement led to the formation of the Virginia Tobacco Settlement Foundation and the Virginia Tobacco Indemnification and Revitalization Commission in 1999 . The SLS grant ended in 2004. After SLS, RWJF created a new national tobacco control funding program, called “Tobacco Policy Change: A Collaborative for Healthier Communities and States.” There was no continuity with SLS in staffing or in its specific mission.Tobacco Policy Change looked at the results from the SLS grant to identify where disparities in tobacco use still existed, and focused on those areas.In Virginia, AHA applied for a Tobacco Policy Change grant, but were denied after RWJF conducted a site visit.In Virginia,rolling track shelving systems sporadic attempts to raise the statewide cigarette tax from 1966 levels occurred in the decade before 1990, but only around the time that the statewide Virginia Indoor Clean Air Act was passed in 1990 did the number of attempts increase.
At that time, Virginia faced a budget deficit that reflected the economic downturn of the time. Estimated at around $1.4 billion in 1990 , the deficit came at a time when the political leadership under Gov. Douglas Wilder generally resisted tax increases of any sort and attempted to balance the budget using program cuts. However, RJ Reynolds came to the conclusion that some form of statewide excise tax increase was possible in 1990-1991 due to the severity of Virginia’s budget crisis. The industry sought to utilize use its lobbying strength, as well as inherent political opposition to taxation at the state level, to combat state tax increases. Thus, the early attempts at increasing the cigarette tax met with failure. For example, in 1990, Del. Dudley Emick introduced a cigarette tax bill, SB 414, which sought to increase the statewide tax from 2.5 cents to 5 cents, to generate $14 million for medical services for about 880,000, people without health insurance.Opponents decried it as a “version of socialized medicine” and Emick’s proposal was tabled indefinitely in the Senate Education and Health Committee soon after being introduced.There is no evidence that public health groups were involved with Emick’s proposal. A case study in the interplay between powerful tobacco industry interests and tobacco control advocates can be found in the 1992 session, where the industry fought off several tax proposals despite a sense among legislators that an increase was likely. 1992 was a transitional session, with the state mired in a deep recession along with the rest of the country. Additionally, several powerful tobacco industry legislative allies were no longer present. Del. A.J. Philpott , the powerful House Speaker who protected tobacco interests, had died the previous year. Additionally, a powerful industry voice in the Senate, Howard Anderson, Jr. , had retired. Anderson’s tenure as Chairperson of the Senate Finance subcommittee during the early 1990s was characterized by a systematic opposition to any tobacco tax proposals. Redistricting had increased the number of urban legislators, diluting the traditionally pro-tobacco rural General Assembly contingent.It was in this environment that the State Board of Health attempted to push a tax increase.
A wide range of tobacco industry interests, business associations and labor unions arrayed themselves against cigarette excise taxes for the 1992 session. James Frye, a lobbyist for Philip Morris, described to the media that the industry had established coalition of groups lobbying against taxes as a “vital economic bulwark in Virginia.”The coalition at this time included the Virginia Tobacco Growers’ Association, the AFL-CIO, the Virginia Farm Bureau, the Virginia Agribusiness Council, the Virginia Wholesalers and Distributors Association, the Virginia Food Dealers Association, the tobacco companies themselves, and suppliers like Reynolds Metals Co.Before the 1992 session began, Virginia’s Board of Health proposed a 24 cent per pack increase in the excise tax. The rationale for the increase was health concerns; Board members testified before legislators about the health problems stemming from cigarette use and argued that the revenues from a tax increase be used for healthcare. However, the Board did not have any paid lobbyists and their efforts were limited to having Board members testify or call on legislators directly. In addition, the Tri-Agency Council declined to take a position on the Board of Health’s proposal, characterizing it as an “economic” issue. Without the lobbying support of tobacco control advocates or any effective lobbying power of their own, the proposal died without even being introduced into the legislature in the face of determined tobacco industry opposition.The primary goal of the 2002 campaign was a 60-cent increase, which, if implemented, would place Virginia close to the national average.The additional revenue would have been used to offset the budget deficit, with no specific funding for tobacco control, although VFHF welcomed the secondary benefit of discouraging smoking initiation. One of the primary individuals working on this campaign was Donna Reynolds, community relations director for the ALA.Reynolds had previously participated in the Southern Communities Tobacco Project and had established relationships with some of the tobacco farmer representatives that participated in STCP, particularly the Concerned Friends for Tobacco , a Virginia-based political action committee.CFT adopted a position that they would “not oppose” tobacco tax legislation, and informed legislators of this position.Additionally, Cathleen Grzesiek recalled in a 2009 interview that some individual tobacco farmers helped with VFHF’s tobacco tax campaign.
However, other farming groups, notably the Farm Bureau, staunchly opposed any tobacco tax increase .Others involved in the VFHF tax campaign included contract lobbyists for the Virginia chapters of the national voluntary health organizations and staff lobbyists Keenan Caldwell and Cathleen Grzesiek .The “2.5 Cents to Common Sense” campaign for a 60-cent increase utilized several tactics, including press releases and other messaging emphasizing that the state had “the lowest cigarette excise tax in the nation and that the state had to move from ‘2.5 Cents to Common Sense.’” The campaign identified three elected officials, the governor, Senate Finance Committee Chair, and the House Majority Leader, as the key figures who needed to be swayed in order to increase the tax. To put pressure on these figures, the coalition utilized pamphlets,customizable shelving system radio and TV advertising and a website.In addition, VFHF had recruited a large number of groups to support their tax increase campaign through grassroots efforts, and activities such as providing testimony at public hearings .In early January 2003, the coalition reiterated its call for higher taxes, calling a press conference to call attention to the health benefits of raising the tax. Warner struck a cautious tone, repeating his position from the previous year that he would consider increasing “sin taxes” to balance the budget, but would not spearhead any such measure. Ultimately, two bills were endorsed by VFHF in the 2003 session: HB 2796 by Del. Mitchell Van Yahres and SB 1113 by Sen. Mary Margaret Whipple D – Arlington, Policy Score 10.0, Total Tobacco Industry Campaign Contributions: $1,000. Both intended to raise the tax to a total of 60 cents. SB 1113 stalled and subsequently died in the Senate Finance Committee soon after being introduced. HB 2796 met the same fate in the House Finance Committee. These bills supported by the coalition did not make much progress through the legislature, despite constant lobbying pressure from VFHF members as a continuation of their“2.5 Cents to Common Sense” campaign.Prospects in the House, controlled by Republicans, were unfavorable after the 2003 session due to increased anti-tax and anti-tobacco-control ideology measures, became even more unfavorable after the 2003 session, especially considering the dismal performance of tax-increase bills in the 2003 session.According to Cathleen Grzesiek, the head of the coalition in 2009, Virginia legislators were unwilling to consider a tax increase until Warner chose to propose it in the 2004 budget.Also, the support of Sen. John Chichester , who was President Pro Tem of the Senate and chair of the powerful Senate Finance Committee at the time, influenced the legislature.Polling in 2004 funded by VFHF and conducted by the Campaign for Tobacco Free Kids , the primary source for technical assistance for VFHF and an advisory group to the VFHF Steering Committee,helped tobacco control advocates advance their positions in favor of increasing the excise tax on tobacco products. In February 2004, TFK contracted the poll to Mason-Dixon Polling, and the survey demonstrated high support for an increase in the cigarette tax for a second year in a row: 71% of respondents supported a 75 cent tax increase.VFHF issued a press release highlighting the results, and stressed that increasing the cigarette tax would be a “win-win” situations for legislators and public health.
A commissioned by TFK analyzed the fiscal and economic consequences of a 50 cent tax increase on Virginia. The report, prepared by Brian Gottlob of the PolEcon Research group,was designed to be presented to legislators and Governor Warner to debunk several of the industry’s arguments about the negative effects of an increase. Notably, the report demonstrated that despite a decline in sales, a cigarette tax increase generally is followed by an increase of state revenue that more than offsets the decline in sales. The report also showed that despite arguments to the contrary, the burden of a cigarette tax mainly falls on households with incomes of $30,000 or more. Perhaps most important to Virginia, with Richmond’s Philip Morris manufacturing presence, was a finding that an increase in excise taxes corresponds with very small changes in overall employment in the state. The report found that a 10% decline in sales would lead to only a 0.1% change in retail employment. Several bills advanced different excise tax increase proposals during the 2004 Special Session I, but ultimately it was HB 5018, the Omnibus Tax Bill, proposed by Del. Harry Parrish that became the vehicle for the actual tax increase of 30 cents. HB 5018 increased taxes generally, including gasoline and car registration as well as tobacco products . The revenue created by the increased tobacco taxes was to be placed in the Virginia Health Care Trust Fund , created by the Omnibus Tax Bill to provide health care services. These health services were not fully defined by the Act but could include “Medicaid payments, disease diagnosis, prevention and control, and community health services.” The HCTF was funded in several ways. Forty percent of all Master Settlement Agreement payments were to be deposited into the HCTF. In addition, a portion of the excise tax on individual cigarettes was paid into the HCTF. Additionally, “roll-your-own” tobacco would be taxed at10% of the sales price, and all of which went into the HCTF. HCTF funds were to be used exclusively for the health care services and the funds would not revert to the general fund at the end of each fiscal year. No provisions were made for HCTF funds to be used for tobacco prevention, control, or the treatment of tobacco-related diseases. Donna Reynolds, a member of VFHF and the community relations director for the American Lung Association of Virginia, remarked to the press in 2004 that much of the success of HB 5018 was due to the fiscal crisis in the state at the time, which created legislative support for generating revenue outside of the lobbying efforts of health advocates.However, Reynolds felt that the lobbying efforts of the tobacco control groups helped set the stage, and additionally prompted “people in leadership roles [to talk] more about what is important to our organization and to Virginians,” especially concerning the need to reduce youth smoking rates.VFHF’s efforts in this regard included face-to-face meetings between VFHF staff, lobbyists, and legislators, as well as grassroots efforts across all VFHF member organizations.