The state Health Department is recommending funding the state's 14 community health centers with cigarette tax money instead of state general funds—a proposal that raises questions among some in the health network.

The Hawaii Primary Care Association, which represents the 14 statewide centers, said the still-to-be-collected cigarette tax revenues in 2009-10 “;are desperately needed”; for capital, infrastructure, emergency preparedness and growth.

Also, points out Beth Giesting, the association's chief executive officer, “;We're trying to get people to quit smoking.”;

The 2006 Legislature increased the cigarette tax and allocated a portion to the community health centers, starting last Sept. 30. The fund totaled $399,000 in November, according to the state Tax Department, and it is expected to be about $8 million in 2009-10, said state Health Director Chiyome Fukino.

“;In this very difficult fiscal time, when we have a dedicated source of funding, we need to use it as much as possible,”; she said.

She said she will recommend a ceiling on the amount given to the health centers, which now receive about $5.6 million per year in state funding for the uninsured.

Giesting said the Health Department's budget for uninsured has been about $3.5 million, with money added by the Legislature most years.

The centers are receiving notices from state agencies about grant reductions as the administration wrestles with a $75 million budget shortfall this fiscal year.

Reduced funding threatens the state's safety net for thousands of poor, uninsured and homeless residents when needs are increasing because of the economic turmoil, leaders of the centers say.

Paul Strauss, chief executive officer of Bay Clinic Inc., with four clinics and a fifth planned on the Big Island, said clients have increased 10 percent to 15 percent in the past year. About 26 percent are uninsured, and the number is growing with unemployment, he said.

“;We're very concerned about the increasing demand for primary care in East Hawaii due to the shortfall of physician and provider resources and our volumes. ... We were relying on the cigarette tax to address capitalization of buildings and equipment that we don't have to support expansion,”; he said.

Giesting said this would be “;the worst time for the state to decrease support”; for the health centers. “;More people than ever are uninsured and should look to a health center, where they'll get really good care.”;

Sen. Suzanne Chun Oakland (D, Kalihi-Liliha), Human Services and Public Housing chairwoman, said the cigarette tax money was intended to supplement general funding for the centers, not replace it. She questions whether the change would be legal.

Senate Health Chairman David Ige (D, Aiea-Pearl City) also said legislators viewed the cigarette tax money as additional funding to allow community health centers to expand. “;We're very much concerned with that and hope to patch that up.”;

Fukino said it might not have been the Legislature's intent to support the health centers with the cigarette tax fund, but there is “;nothing that says you can't supplant general funds,”; she said.

“;We have a deficit that has to be closed. ... We need to try to figure out all different ways to fund the programs that we have in order to preserve the services needed for people of Hawaii,”; Fukino said.

“;There is no money in the general fund, and there probably is going to be a lot less in March and again come May (when the state Council on Revenues meets) to assure a place for some of these very important services,”; she added.

The centers cared for 110,000 residents in 2007, Giesting said, stressing that every dollar spent on care for the uninsured in the community centers saves the state's health-care system $10.

David Peters, chief executive officer of the three Kauai centers, Ho'ola Lahui Hawaii, said proposed cuts to adult dental benefits under Medicaid and to the uninsured would “;deal a double blow to our ability to pay for the care we provide.”;

Loss of the dental benefit would have a “;devastating impact,”; he said, calling it “;incredibly shortsighted to eliminate a program that is supported by the federal government at a 55 percent match to balance a budget deficit.”;

Sheila Beckham, Waikiki Health Center director, said 90 percent of clients arrive there uninsured, and the staff reduced the number to 25 percent in 2007-08 by helping patients apply for Medicaid and QUEST.

“;We're seeing a rise in homeless folks in overall numbers, and like all other centers, we're concerned about grants with the state being cut,”; she said, adding that the center is increasing personnel to expand its medical practice and be less reliant on grants, donors and “;an unstable economic climate.”;