Assigned to HEA                                                                                                                AS PASSED BY THE SENATE

 

 

ARIZONA STATE SENATE

Phoenix, Arizona

 

REVISED

FACT SHEET FOR H.C.R. 2047/S.C.R. 1022

 

tobacco products tax; health services.

 

Purpose

 

Increases the tobacco tax for health care and allocates the new revenue to various health care programs, including the Medicaid expansion, uncompensated care, trauma center readiness costs, disease research contracts, prevention and early detection programs 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. $ 0.02 for each cigarette.
  2. $ 0.045 per ounce for smoking tobacco, snuff, chew, etc.
  3. $ 0.011 per ounce for cavendish, plug or twist tobacco.
  4. $ 0.089 for 20 small cigars.
  5. $ 0.044 for three nickel cigars or for one cigar costing more than a nickel.

 

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 diseases 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, H.C.R. 2047 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. 5 percent (approximately $7.5 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.
  6. 2 percent (approximately $3.0 million) to the health education account for prevention and early detection programs on the four leading disease-related causes of death in this State.

 

Provisions

 

Tobacco Products Tax Fund

 

1.      Establishes the tobacco products tax fund consisting of revenues generated by increasing the tobacco tax for health care rates, that were in effect on January 1, 2002, by one and one-half and interest earned on those revenues.  Requires the AHCCCS administration to administer the fund.

 

2.      Allocates monies in the fund as follows:

 

a.       42 percent to the proposition 204 protection account.

b.      27 percent to the medically needy account.

c.       20 percent to the emergency health services account.

d.      5 percent to the health research fund.

e.       4 percent to the health care adjustment account.

f.        2 percent to the health education account.

 

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

 

Health Education Account

 

4.      Recodifies the health education account

 

5.      Allows the Department of Health Services (DHS) to use account monies for audits of both the account and tobacco education prevention programs.

 

6.      Requires DHS to use monies deposited in the account from the tobacco products tax fund for prevention and early detection programs on the four leading disease-related causes of death in this State.

 

7.      Stipulates the initial diseases are cancer, heart disease, stroke and pulmonary disease.

 

8.      Shifts the responsibility of the Auditor General to conduct an evaluation of health education account programs to DHS.

 

Emergency Health Services Account

 

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

 

10.  Requires, subject to legislative appropriation, the AHCCCS administration to use account monies only for the reimbursement of uncompensated care and trauma center readiness costs.

 

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

 

Health Care Adjustment Account

 

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

 

13.  Requires, by January 1 each year, 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 due to the increased tobacco tax.

 

14.  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 fund, medically needy account and emergency health services account.

 

Proposition 204 Protection Account

 

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

 

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

 

17.  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

 

18.  Requires, by January 1, 2004, the Legislature to establish a commission to advise and consult DHS on the goals, objectives and activities of tobacco education prevention programs.

 

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

 

Miscellaneous

 

20.  Transfers health education account monies to the recodified account.

 

21.  Specifies the referendum is not effective if an initiative that increases the tax on tobacco products receives more votes.

 

22.  Contains an intent clause.

 

23.  Makes conforming changes.

 

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

 

Amendments Adopted by Committee

 

1.      Includes interest earnings in the tobacco products tax fund.

 

2.      Replaces, under the distribution of monies from the tobacco products tax fund, the health research account with the health research fund.

 

3.      Requires emergency health services account monies to be used only for uncompensated care and trauma center readiness costs.

 

4.      Subjects the emergency health services account to legislative appropriation.

 

5.      Bases the tax increase on the tobacco tax for health care rates that were in effect on January 1, 2002.

 

6.      Diverts two cents of the distribution of monies from the health research fund to the health education account for prevention and early detection programs.

 

7.      Maintains the restriction on the use of health education account monies for tobacco education prevention programs.

 

8.      Eliminates the requirement of the Auditor General to evaluate health education account programs.

 

9.      Allows DHS to use health education account monies for audits of both the account and tobacco education prevention programs.

 

10.  Replaces the conditional enactment clause.

 

11.  Adds an intent clause.

 

12.  Makes several conforming and technical changes.

 

Amendments Adopted by Committee of the Whole

 

·        Shifts the responsibility of evaluating health education account programs from the Auditor General to DHS.

 

House Action                                                               Senate Action

 

APPROP         5/2/02              DPA    12-2-0-2          3rd Read           5/15/02            20-6-4-0

3rd Read           5/9/02                          35-22-3-0          (substituted for S.C.R. 1022 on 3rd read)

 

 

Prepared by Senate Staff

May 28, 2002