Smokers resent state’s eye on tobacco for $422 million shortfall (VIDEO)

Smokers in Kansas say they resent the state using a tobacco tax increase to help fill a budget hole. And some say they’ll take their business to Oklahoma or Missouri if the tax increase passes.

Gov. Sam Brownback proposed boosting the cigarette tax from 79 cents a pack to $2.29 a pack. The state faces a budget deficit of about $422 million largely because of income tax cuts.

“Trickle-down economics did not work in the ’80s with Reaganomics, and it is stunningly clear that it’s not working here,” said Robin McAlpine, a smoker who lives in Wichita. “I shouldn’t be punished or penalized so that the governor can close the gap on his failed experiment.”

The tax increase does have supporters. Two-thirds of respondents backed it in a statewide poll by the Docking Institute of Public Affairs. And many health care workers say higher tobacco taxes have the potential to deter smoking.

But Brownback’s proposal has proven unpopular among lawmakers, especially those who live along the Missouri border.

Rep. Marvin Kleeb, R-Overland Park, who chairs the House Taxation Committee, said lawmakers may consider passing a smaller tobacco tax increase instead. “It’s probably going to be a variation versus the full amount on the tobacco,” he said.

Mark Epperly, a Derby resident, is a smoker who lost his wife to lung cancer. He said he thinks the state would lose revenue from its heaviest smokers because of the savings offered in a neighboring state.

“It’s not just like, ‘Hey, I think I’ll go grab a pack of cigarettes,’” he said. “It’s planned – they know they’re going to smoke. They’re going to go where they can save money.”

Epperly is one of 29 smokers who responded to an Eagle questionnaire through the Public Insight Network. Of those, 18 said they would buy tobacco in a neighboring state if the tax increases. Seven said they would quit.

Other states

Some smokers may take their business out of Kansas, but a tobacco tax hike has paid off elsewhere.

Minnesota collected more than $204 million in new tax revenue even though the state sold 54.6 million fewer packs of cigarettes.

Minneapolis is about 43 miles from the Wisconsin border – much like the distance from Wichita to the Oklahoma border.

But there are incentive differences.

The tax difference between Minnesota and Wisconsin is 82 cents, compared with a $1.26 difference between Kansas and Oklahoma and a $2.12 difference between Kansas and Missouri if lawmakers approve Brownback’s proposal.

Wichita resident Suz White said she’s been buying cigarettes outside Kansas for six years. She said she stocks up when she visits her family and cabin in Missouri or gambles in Oklahoma.

“I don’t think there are that many smokers that will generate that kind of revenue that Brownback estimates,” she said. “Especially if people go across state lines.”

The state projects it would collect nearly $81 million more next fiscal year if it raises the tobacco tax, according to the Kansas Division of the Budget. That estimate includes a 20 percent drop in sales – the decrease Kansas saw when it raised the tobacco tax in 2002.

Ted Stessman, tobacco director for Farner-Bocken Co., said he’s repeatedly seen border bleeding because of tobacco tax hikes. Farner-Bocken serves stores in 14 states including Kansas, Missouri and Oklahoma.

“It’s not fair, in my opinion, to the Kansas retailers,” he said.

Tobacco users are the most frequent customers in convenience stores, and tobacco products rank highest for in-store sales, according to data from the National Association for Convenience & Fuel Retailing.

“It’s kind of a lose-lose because the retailers won’t get the business and the state won’t get the taxes either,” Stessman said.

Scott Larkin, president of Kansas Candy and Tobacco, a Wichita-based wholesaler, said job loss is the first thing that comes to mind if the tax passes.

“Workforce has to go down to stay afloat,” he said. “I don’t know where I would start as far as letting people go. It would be tough.”

Ray Thorp, a resident of southwest Wichita, said he buys cigarettes for his 21-year-old daughter, Lauren, who has smoked since she was 17 to cope with mental health issues.

He said he would buy cigarettes out of state when convenient, but otherwise pay the tax increase in Kansas.

Thorp said he’s disgruntled about the prospect of paying roughly $45 more in taxes each month while business owners enjoy a tax break.

“On the whole, it sounds good to tax the sin taxes,” he said. “But really, why do I have to pay for someone else’s good fortune?”

Contributing: Bryan Lowry of The Eagle

This story was originally published April 25, 2015 at 3:31 PM with the headline "Smokers resent state’s eye on tobacco for $422 million shortfall (VIDEO)."