During March, the Revenue Committee still had not decided whether or not to advance LB 1149 out of committee. Instead, they were spending their time working to craft a tax increase bill to help balance the state’s budget. The bill that was advanced out of committee, LB 1085, was written to raise $90 million in revenue primarily by expanding the sales tax base and increasing the cigarette excise tax by only $0.20.Eighteen of the twenty cents in the Revenue Committee’s excise tax increase went to the General Fund with the remaining two cents going to the Building Renewal Allocation Fund. With an excise tax increase included in their tax bill, the Revenue Committee decided 6-0 to gut LB 1149 and replace it with a Medicaid eligibility amendment.At this point, the excise tax increase no longer contained an earmark for the Tobacco Prevention and Control Cash Fund.On March 25, Senator Jensen attempted to get support for an amendment that would raise the excise tax increase back up to $0.50, but unable to find the support necessary for such an amendment, Jensen began working toward a $0.30 tax increase.In the morning of March 26, he was successful in getting an amendment to LB 1085 passed by a vote of 28-15 that increased the excise tax to $0.30.By the afternoon, Jensen’s amendment had been jettisoned due to intense opposition from Senator Ernie Chambers . Chambers, the Legislature’s only African American senator, was strongly opposed to an excise tax increase because he felt it was unfair to target a minority of taxpayers especially since that minority contained more individuals who were poor and non-white.Thirty-three votes were needed to overcome a Chambers’ filibuster so, with only 28 vote, the amendment was removed. Instead,indoor vertical farming the Legislature began focusing on using sales and income tax increases to balance the budget.
The reversal did not surprise the members of Citizens for a Healthy Nebraska. “This was always going to come down to the 11th hour,” said Rich Lombardi, one of the lobbyists for the coalition. “We’ll be here right to the very end.”Governor Johanns was not happy with the Legislature’s decision to utilize sales and income tax increases to balance the budget and promised a veto.He accused the Legislature of trying to tax their way out of the budget crisis instead of making the cuts he recommended.On April 8, a cigarette excise tax increase was again incorporated into LB 1085.It had become apparent that the sales and income tax increases would not be enough to balance the budget so, by a vote of 32-16, the Legislature again added an amendment to LB 1085 which increased the excise tax by $0.30.This excise tax increase was written to sunset after two years.Governor Johanns made good on his threat and vetoed LB 1085 because it increased the state’s sales and income taxes. The Legislature responded by voting 30-19 to override the governor’s veto.With that vote by the Legislature, Nebraska increased its excise tax on a pack of cigarettes from $0.34 to $0.64 for two years. As a result of further budget woes, the sunset clause for the $0.30 tax increase was removed in 2003 so that the increase became permanent . None of the revenues were ever allocated to tobacco control. At the beginning of the 2003 session of the Legislature in January, Nebraska was facing a $673 million gap in the budget.Unfortunately for health advocates in Nebraska, it was in this climate that they had to pressure legislators to continue funding Tobacco Free Nebraska at $7 million per year because the program was only funded out of the tobacco settlement through FY2002.In previous years, Citizens for a Healthy Nebraska had pushed for an earmark for Tobacco Free Nebraska as part of an cigarette excise tax increase . While they had been successful in getting a temporary $0.30 excise tax passed in 2002, the Legislature was unwilling to provide an earmark for tobacco control because legislators wanted to use all of the increase to deal with the budget crisis. Despite the fact that during the 2002 regular session, $5 million had not been reallocated to Tobacco Free Nebraska and the Legislature had been unwilling to provide continued funding for the program through an excise tax earmark, health advocates had some reason to be optimistic at the beginning of the 2003 session in January.
On January 15, 2003 Governor Johanns unveiled his biennium budget which called for making the $0.30 excise tax increase permanent and enacting an additional $0.20 excise tax increase that would devoted to the General Fund.Due in part to the increased funds that the state would be taking in from the $0.20 excise tax increase that was proposed, Johanns’ budget also included $3 million per year from the General Fund for each of the next two years to support Tobacco Free Nebraska. Two characteristics of Johanns’ budget would have serious consequences for tobacco control in Nebraska: it contained no other tax increases other than the cigarette excise tax increase and the $3 million for Tobacco Free Nebraska came out of the General Fund and not directly from the cigarette excise tax or the tobacco settlement.Due to the fact that, once again, Johanns stuck to his anti-tax mantra and insisted on no new taxes except an increase in the cigarette excise tax, his budget was largely discounted by legislators as unfeasible to deal with such a large budget deficit. To avoid raising taxes, Johanns’ solution was to cut funding to K-12 and to higher education by 10% for each of the next two years.His budget also called for a similar 10% cut for most state agencies. Many in the Legislature were very displeased that Johanns seemed willing to make such deep cuts to avoid increasing taxes. Some senators went so far as to say that the governor was avoiding the idea of raising taxes so the Legislature would take all the political heat for increasing taxes. “The way he’s handled it is fairly typical of the way governors in the past have handled it – they usually do turn it over to the Legislature for the realistic solution,” stated Senator Chris Beutler of Lincoln . “What he suggested certainly isn’t realistic. We need to do it ourselves.”Another critic of Governor Johanns’ budget was Senator Nancy Thompson . She said, “A lot of us think he’s just abdicating his leadership role – he just lobbed it over here.”Because legislators were upset at the governor’s insistence that the budget crisis should be remedied almost exclusively through spending cuts, a critical eye was turned towards the $3 million annually that he had in his budget for Tobacco Free Nebraska. Since the program had previously been funded out of the tobacco settlement and not out of the General Fund, many legislators viewed the $3 million as new spending from the General Fund.This $3 million was, however, a small fraction of the approximately $20 million that the $0.20 increase in cigarette excise taxes would bring in to the General Fund.
The fact that the funding for Tobacco Free Nebraska in the governor’s proposed budget was seen as new spending from the General Fund while the Governor was also calling for 10% cuts to many other programs, such as education,vertical harvest farms that had long be paid for out of the General Fund would be a huge pitfall for health advocates in Nebraska. The deep cuts to education were particularly unpalatable to many legislators and much of the 2003 legislative session consisted of legislators attempting to find a way to moderate the governor’s proposed cuts and still lower the budget deficit. This effort was rendered even more difficult when the budget deficit figure rose to $761 million in April.At this point, senators were debating which taxes could be raised to best help with the budget deficit. One proposal, initially advanced in Governor Johann’s budget was to make the $0.30 excise tax increase passed in 2002 permanent.Increasing the tax the previous year and now making it permanent, however, meant that the Legislature was unwilling to pass the additional excise tax increase of $0.20 proposed by Johanns. On May 6, the Legislature voted 34-7 to advance LB 285 which extended the temporary excise, sales and income tax increases passed in 2002 from the first round of debate.It was estimated that enacting LB 285 would bring in $235 million over two years and by factoring in additional sales, income and alcohol tax increases that the Legislature was considering, the total in revenue raised by all the tax increases was estimated to be $315 over the next two years. Even so, all these tax increases combined with spending cuts still left the Legislature $40 million short of a balanced budget.Up until early May 2003, tobacco control advocates in Nebraska had been unable to convince the Legislature to return the funding level for Tobacco Free Nebraska to $7 million per year; the $3 million per year proposed by the Governor, however, still remained in the budget bill. With the legislative session almost over, legislator began reviewing this budget bill for any additional areas that could be cut. On May 8, Senator Ronald Raikes of Lincoln , chairperson of the Education Committee, proposed an amendment to the budget bill to completely remove the $3 million per year that Tobacco Free Nebraska was to receive. The same day, Speaker of the Legislature Curt Bromm of Wahoo introduced an amendment to the tax package bill that sought to increase the cigarette excise tax by $0.03 to $0.67, which was estimated to raise approximately $3.3 million, to all be placed in the Tobacco Prevention and Control Cash Fund, Tobacco Free Nebraska’s funding source. With these two major amendments introduced on the same day, the health advocates in Nebraska rapidly stepped up their lobbying efforts. Telephone calls and e-mails went out to individuals to mobilize them to contact their state senator to urge him or her to vote no on Senator Raikes’ amendment and yes on Senator Bromm’s. In addition, they flooded Senator Raikes’ office with calls protesting his amendment. His response was that it was not his intention to gut the Tobacco Free Nebraska program but that he felt that the program should be funded out of the tobacco settlement and not out of the General Fund.He had not, however, introduced such legislation or included a provision to do so in his amendment. Throughout the legislative session, tobacco control advocates had been attempting to garner more money for Tobacco Free Nebraska out of the tobacco settlement, without any success. All of the interest generated by the settlement was already committed to the $50 million per year in health-related expenses funded by LB 692 which was passed in 2001.In contrast to earlier willingness to fund Tobacco Free Nebraska out of the settlement money, many legislators stated their preference for funding tobacco control using an excise tax increase instead of the tobacco settlement. The reason why some of these legislators were not supportive of using the tobacco settlement was because they were afraid that using the tobacco settlement money for anything other than the package of programs funded through LB 692 would jeopardize the funding source for these programs. Two of the senators that pushed for excise tax increases instead of using tobacco settlement money were the heads of the Health and Human Services Committee, Jim Jensen and Dennis Byars. In 2001, both senators had been major architects of LB 692 and had pushed for the tobacco settlement to be used for public health improvements with Senator Jensen focusing on mental health services and Senator Byars pushing for developmental disabilities and respite care .During the 2003 session, these two senators introduced and passed LB 468, which refunded out of the tobacco settlement all of the health-related programs first funded as part of LB 692.While the funding for these programs was not increased due to the budget crisis, they were not cut from their previous levels of funding either. Biomedical research, which had been scheduled to jump from $10 million to $12 billion for FY2004 and FY2005 remained at $10 million.The result was that biomedical research, which was already received over $10 billion a year in funding from the National Institutes of Health and other sources, continued to receive more money from the tobacco settlement than the tobacco control program.