[ OUR OPINION ]
Diverting tobacco money
will cost state more
in the long run
THE ISSUE The Legislature is considering another cut in the amount of tobacco settlement money to be spent on anti-smoking programs.
EFFORTS to combat tobacco smoking in Hawaii have taken major hits during the past year and are threatened by even more difficulties. Slashing funds for programs aimed at helping smokers quit and discouraging young people from taking it up could result in greatly increased tobacco-related health-care costs.
Money for the programs comes from state tax revenues allocated for the state Department of Health and from the state's share of proceeds from the 1998 out-of-court settlement of lawsuits brought by 46 states against tobacco companies. Hawaii receives more than $40 million a year from the settlement, and one-fourth of that initially was devoted to tobacco prevention and control.
However, a special session of the Legislature in 2001 cut that allocation by half, to 12.5 percent, so some of the money could go toward construction of a new University of Hawaii medical school. A bill in the current session would reduce the allocation to only 10 percent, or about $4 million, diverting some settlement proceeds to the state's general fund.
Meanwhile, Philip Morris USA has warned that it might miss this year's $2.6 billion settlement payment, due April 15, to state governments. Hawaii's share of that payment is about $15 million. An Illinois judge ordered the company last month to pay $10.1 billion for deceiving Illinois smokers of low-tar brands into thinking they were safer, or post a $12 billion bond to appeal the decision. State attorneys general are urging the judge to lower the bond amount so Philip Morris has the money to make its annual payments to the states. Philip Morris has raised the possibility of bankruptcy.
Legislators may be fooled into thinking they are acting in the state's financial interest by diverting money from tobacco prevention to achieve a balanced budget. The opposite is true, since failure to reduce smoking will result in a continued annual cost of $328 million in health-care and other costs.
Although only 18.7 percent of Hawaii's adults smoke -- about 4 percent less than the national percentage of adult smokers -- nearly 27 percent of Hawaii's high school students have begun the deadly habit. Nine of every 10 adult smokers began the habit as teenagers, and only one in 50 succeeds in quitting. Unless the current trend can be reversed, health-care costs will increase.
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Budget grappling leaves
two funds untouched
THE ISSUE Lawmakers struggle to balance the state budget without taking money from the rainy-day and hurricane relief funds.
THE millions of dollars tucked away in the state's "rainy day" and hurricane relief funds would ordinarily be tempting targets for raids as the state struggles to reconcile revenue with spending. However, neither lawmakers nor the administration appear to willing to tap those reserves even as the public and state agencies protest budget cuts.
Instead, a Senate bill proposes to reduce the amount of tobacco settlement money that goes into the rainy-day reserve from 24.5 percent to 20 percent. This up-front shift would allow legislators more spending leeway because once funds are placed into the reserve, law places restrictions on their use.
The Senate also wants to take special and revolving funds from agencies, some of which are required to be self-sustaining, at levels far higher than recommended by Governor Lingle, a move the administration correctly warns may threaten agency operations.
At the same time, the Senate wants to increase the state excise tax by half a percent -- not to balance the budget, but to collect another $120 million, $80 million of which lawmakers vaguely peg for public schools.
An increase in the excise tax, which Lingle opposes, would further burden businesses and consumers since it would increase the cost of basic needs such as food, clothing and health care while boosting expenses for business transactions. Although a $100-per-person tax credit is supposed to offset the increase, excise taxes are particularly onerous for those at lower income levels, who pay a higher percentage of their earnings.
About $43 million is tucked away in the rainy-day fund and another $187 million is held in the hurricane relief fund. Governor Lingle is opposed to using these, saying they represent one-time fixes to the state's budget problems. She is right. However, as the Iraq war presses hard on the state's economy, she and lawmakers may have to adjust. A short-term solution may be necessary if tourism continues to wallow.
Residents' expectations also may need some realignment. As painful and difficult as it may be, taxpayers will have to accept that balancing the budget requires fiscal restraint and the sacrifice of some state services to which we've grown accustomed.
