Assigned to HEA                                                                                                                                   FOR COMMITTEE

 

 

 

ARIZONA STATE SENATE

Phoenix, Arizona

 

FACT SHEET FOR S.C.R. 1022

 

tobacco products tax; health services

 

Purpose

 

Increases the tobacco tax for health care and allocates the revenue generated by the increase for various health care programs, including the Medicaid expansion, uncompensated care, trauma center readiness costs, disease research and other health care services programs.

 

Background

 

On November 9, 1994, Arizona voters approved Proposition 200, the Tobacco Tax and Health Care Act, increasing the state=s tax on tobacco products as follows:

 

  1. For each cigarette – 0.02 cents.
  2. For smoking tobacco, snuff, chew, etc. – 0.045 cents per ounce.
  3. For cavendish, plug or twist tobacco – 0.011 cents per ounce.
  4. For 20 small cigars – 0.89 cents.
  5. For three nickel cigars or for one cigar costing more than a nickel – 0.44 cents.

 

Revenues collected as a result of the increased tax are deposited in the tobacco tax and health care fund.  The initiative allocated monies in the fund as follows:

 

  1. 70 percent to the medically needy account for health care services to medically needy or medically indigent persons or low income children and to persons who cannot afford those services and for whom there would otherwise be no coverage.
  2. 23 percent to the health education account for the prevention and reduction of tobacco use through public education programs.
  3. 5 percent to the health research account for research on the prevention and treatment of tobacco related disease and addictions.
  4. 2 percent to the adjustment account to compensate the corrections fund due to future reductions in deposits as a result of the increased tobacco tax.

 

If approved by the voters, S.C.R. 1022 increases the 1994 tobacco tax for health care rates by one and one-half.  According to Joint Legislative Budget Committee staff’s preliminary estimates, this increase would generate approximately $150.9 million annually, excluding loss of revenue due to the elasticity on the existing tobacco tax.  The referendum requires the new tobacco tax revenue to be deposited into the tobacco products tax fund and allocated as follows:

 

  1. 42 percent (approximately $63.4 million) to the proposition 204 protection account for expenses related to the voter-approved expansion of the Arizona Health Care Cost Containment System (AHCCCS).
  2. 27 percent (approximately $40.7 million) to the medically needy account for existing purposes.
  3. 20 percent (approximately $30.2 million) to the emergency health services account for reimbursement of uncompensated care and trauma center readiness costs.
  4. 7 percent (approximately $10.6 million) to the health research account for existing purposes.
  5. 4 percent (approximately $6.0 million) to the health care adjustment account to compensate the medically needy account, health education account and health research account due to future reductions in deposits as a result of the increased tobacco tax.

 

Provisions

 

Tobacco Products Tax Fund

 

1.      Establishes the tobacco products tax fund consisting of revenues generated by increasing the existing tobacco tax for health care rates by one and one-half.

 

2.      Requires the AHCCCS administration to administer the fund.

 

3.      Allocates monies in the fund as follows:

 

a.       42 percent to the proposition 204 protection account.

b.      7 percent to the health research account.

c.       27 percent to the medically needy account.

d.      20 percent to the emergency health services account.

e.       4 percent to the health care adjustment account.

 

4.      Specifies monies in the fund and accounts are continuously appropriated, nonreverting and exempt from lapsing.

 

Health Education Account

 

5.      Recodifies the health education account but removes the restriction of the Department of Health Services (DHS) to use monies in the account only for tobacco use prevention and reduction media programs and for tobacco use prevention and reduction education programs with county health departments, qualifying community health centers, Indian tribes, schools, and nonprofit organizations.

 

Emergency Health Services Account

 

6.      Establishes the emergency health services account under the administration of AHCCCS.

 

7.      Requires the AHCCCS administration to use the account monies for the reimbursement of uncompensated care and trauma center readiness costs.

 

8.      Specifies unexpended and unencumbered monies as of June 30 each year revert to the proposition 204 protection account.

Health Care Adjustment Account

 

9.      Establishes the health care adjustment account under the administration of the Department of Revenue (DOR).

 

10.  Requires DOR to transfer account monies to the medically needy account, health education account and health research account to compensate for decreases in deposits from the tobacco tax and health care fund to these accounts due to the increased tobacco tax.

 

11.  Specifies the balance of account monies after the transfers are made reverts to the tobacco products tax fund for distribution to the proposition 204 protection account, health research account, medically needy account and emergency health services account.

 

Proposition 204 Protection Account

 

12.  Establishes the proposition 204 protection account under the administration of AHCCCS.

 

13.  Requires the AHCCCS administration to use account monies for the AHCCCS expansion for eligible persons up to 100 percent of the federal poverty level.

 

14.  Requires the AHCCCS administration to spend the account monies prior to spending monies in the Arizona tobacco litigation settlement fund.

 

Tobacco Revenue Use, Spending and Tracking Commission

 

15.  Requires, by January 1, 2004, the Legislature to establish a commission to advise and consult DHS on the goals, objectives and activities of programs supported by health education account monies.

 

16.  Requires the commission to include members with expertise in public health services, tobacco cessation and addition programs, school-based tobacco education programs, marketing or public relations, and research and evaluation of public health programs.

 

Miscellaneous

 

17.  Stipulates the referendum takes priority over an initiative if they are in conflict and the referendum receives more votes.

 

18.  Makes conforming changes.

 

19.  Becomes effective on approval by a majority of the voters and on proclamation of the Governor.

 

 

Prepared by Senate Staff

May 2, 2002