When the health care reform debate began in earnest at the State Capitol, well over a year ago, Republican legislators came to the table with a multitude of innovative ideas to solve many of the current and inevitable problems in California’s health care system. One of those, authored by Senator Cox (R-Fair Oaks), was to ask voters to reprioritize tobacco tax dollars currently collected under a 1998 voter-approved initiative, Proposition 10, for children’s health care.

 

Ironically, the Democrats had a similar idea, but with a different goal in mind. It is not uncommon for Democrats to capitalize on the voter’s willingness to accept so-called “sin taxes” as a funding method for programs that may or may not have anything to do with curbing the “sin.” In that vein, liberal legislators proposed to once again boost the tax on tobacco products to pay for their very expensive health care scheme. Even Democrats who wisely opposed this scheme continue to push for new tobacco taxes as a way to minimize cuts in existing health care programs.

 

However, many questions come to mind when we look at California’s First 5 program, the original program for which tobacco taxes were to be used to improve the health and well-being of California’s youngest citizens. Unfortunately, when we look closely at what has been funded with that money, many of the programs have little or nothing to do with child development or health services.

 

Counties throughout the state were entrusted with substantial tobacco tax revenues collected through Proposition 10. This year alone, the 58 county commissions took in $641 million in revenues. But, they spent only $570 million, which left $70 million for a good rainy day fund – covering nearly 2 months of expenses. However, recently more than $2 billion has been discovered sitting in 58 different county reserve accounts collecting dust. In some cases, that amount is well over four times the county’s annual budget for First 5 programs.

 

While First 5 proponents will argue that the reserves are necessary because of the multi-year nature of the grants the county commissions award, the bottom line is we have a very large reserve of funds that have not gone to help educate, feed, or provide health care for California’s children. What’s more, there is more than $300 million sitting in the state’s First 5 coffers. With these discoveries, taxpayers would be warranted in asking exactly how well additional taxes levied on tobacco products, or anything else, will be used and why those funds cannot be used to pay for health care for California’s kids.

 

The answer lies, as usual, in government mismanagement. In 2006, a Los Angeles Times story detailed how the First 5 Commission spent $23 million in state funds. That money was spent on television ads that promoted the benefits of preschool. The ads corresponded with a campaign run by Hollywood Director Rob Reiner for a "Universal Preschool" initiative, Proposition 82, which was on the ballot at the time. The story also noted that the Commission paid for a political consultant who became the campaign manager of Proposition 82, even though California law strictly prohibits using public funds for campaign activities.

 

On the state First 5 website, the executive director currently proclaims, “First 5 California’s programs are designed to meet its goal of ensuring more children are born healthy, raised in nurturing homes and ready for school.” However, the kinds of programs that have been funded through the First 5 county commissions make that claim questionable, at best.

 

For instance, one county awarded hundreds of local childcare providers with a $120,000 shopping spree and gave away $135,000 in grants to a university for scholarships to students studying human development. Others sponsored $3,500 in swim lessons for soccer players, bequeathed $5,000 for a “Clean the Creek” project, and provided $2,500 to fund an annual New Year’s celebration. Although some may argue the benefit of these programs, it is not clear how they are directly related to the purpose of the program – ensuring California’s children under age 5 receive immunizations and other health care services, have adequate nutrition, and nurturing families.

 

Redirecting only a portion of these tax dollars to fund health care for all of the children in California that currently do not have it would be prudent budgeting. However, it is critical to remember that tobacco taxes are a declining revenue source and that budget savings and other funding mechanisms will have to be explored to keep health care programs or any other programs that rely on tobacco taxes funded in the future.

 

Before anyone proposes raising taxes to fund health care or any other budgetary program, we need to ensure that the taxes currently being collected are used appropriately. We cannot continue to ignore past mismanagement of tobacco tax revenues. Funds currently being collected under this program “for the children” should be used to benefit them directly before we ever consider collecting even more money that could be inappropriately spent.