Of Lucky Strikes and Lotteries (Commentary by Jeff Wood)

A gluttonous quartet of habits — smoking, drinking, eating and gambling — are the triggers behind several early bills proposed this state legislative session in Little Rock. The bills either make it easier, or more expensive, to enjoy all of the above.

It’s no wonder then that “health care” made an early intervention to become the central theme for the 87th Arkansas General Assembly.

Business leaders trying to decipher their own rooting interests got little to consume through mid-January. It appears, though, a potential manufacturing utility tax exemption, lottery merchandising for retailers and general budgetary constraints are the early concerns.

State Rep. Uvalde Lindsey, D-Fayetteville, recently said the catalyst for decision making will be the state’s monthly revenue projection updates.

In particular, if collections continue falling like they did in December, that data will “drive any action going forward.”

Despite making his first foray into state elected office, Lindsey, 69, has served as a registered federal and state lobbyist for more than 30 years. Prior to that, he was the state budget director for then Gov. Bill Clinton. That followed a decade on the Harrison City Council where he was budget chair for eight years.

So even though he’s one of the “youngest” reps Northwest Arkansas sent to the capital city this biennium (see list, p. 20), Lindsey is one of the most experienced political thinkers in Arkansas.

Expect him to become a “go-to” guy in the Arkansas House as budgetary pressures mount — a political pot that’s already on full boil.

Gov. Mike Beebe’s proposed 1-cent grocery tax cut will pass, despite the $30.1 million it’s expected to bite out of state funds. Beebe continues to make good on his 2006 campaign promise to eliminate the regressive tax, after helping half it from 6 cents to 3 cents in 2007.

His position of strength, plus sweeping support, virtually assures victory.

Unfortunately, the fiscal year 2010 state revenue forecast sits at $4.411 billion and change. Beebe’s total executive recommendation for the budget is $4.616 billion, leaving a gap of about $205 million. That includes about $145 million in unfunded appropriations above the governor’s required balanced budget proposal ($4.47 billion).

If the state’s $300 million surplus starts to get swallowed, then $27.8 million sought beyond the balanced budget for public school funds will be the first casualty.

A proposed 56-cent per pack tax hike on cigarettes ($88 million), and a 5 percent added tax on liquor, beer and wine ($27 million) are projected to generate about $115 million in new “sin tax” revenue. Beebe has already called “dibs” on a new statewide trauma care system that projections say would cost about $30 million.

Trucking firms and business owners with vehicle fleets should worry if Beebe’s tax on smokes fails. The current alternative plan would increase motor vehicle insurance.

About 70 percent of the booze bill revenue is to go toward substance abuse and treatment programs.

The rest would be for community-based services for seniors and anti-domestic violence funding.

The Arkansas State Chamber of Commerce has led the way to nix the manufacturing utilities tax. Detractors miss the point that this would help significantly sharpen Arkansas’ sword for recruiting new industries, not to mention help protect pressured manufacturing jobs. The biggest hurdle is an already crowded trough.

Finally, there’s the mother of all scratch-off tickets for the General Assembly to consider. Figuring out how to implement the state lottery voters approved in November is tricky.

Scratch wisely, and the projected $100 million in annual revenues will generate more than $30 million in annual scholarship funds for Arkansas students to study at Arkansas colleges. Scratch wrongly, and instead of maximizing proceeds legislators will be faced with a “please try again” message that will be a tough ticket to sell.

For retailers, primarily convenience stores, it’s time to figure out how much investment and counter space must be dedicated to tapping into those 6 percent retail commissions.

A guaranteed new revenue stream might be their best bet in a long time.

Smoke, Smoke, Smoke

Honus Wagner knew it 100 years ago: Tobacco will kill you. That (or maybe a dispute over royalties) was why he demanded that the American Tobacco Co. stop producing baseball cards bearing his likeness, and why they are so rare that John Rogers of North Little Rock had to pay $1.62 million to get one.

Tex Williams knew it 60 years ago, when he gave Capitol Records its first million-selling hit record: “Smoke! Smoke! Smoke! (That Cigarette).” And he smoked until he died of cancer in 1985.

In 2009, everyone over the age of 5 knows that smoking is a leading cause of early death, yet the addicts huddle outside even in sub-freezing January temperatures to “puff, puff, puff until you smoke yourself to death.”

Gov. Mike Beebe has proposed almost doubling the state tax on cigarettes from 59 cents to $1.15 per 20-cancer-stick pack. The $80 million or so that it would generate every year would go first to the long overdue task of creating a real trauma system for Arkansas with plenty left over to be parlayed, through the magic of a 3-to-1 federal match, into Medicaid dollars.

The crowd that opposes all taxes all the time points out that cigarettes are an unreliable source of tax revenue since smoking is becoming less and less popular all the time. And they are right: The Centers for Disease Control & Prevention reported in November that the prevalence of smoking among adults had dropped below 20 percent for the first time since government tracking began in the 1960s.

But we say legislators should cross that revenue bridge when they come to it. Jacking up the state tax should discourage more Arkansas teens from taking up the deadly habit and even serve as an incentive for the long-time smokers who have been meaning to quit for years.

In the meantime, the tax can be saving the lives of trauma victims and providing health care for Arkansans — some of whom are sick primarily because they smoked.

It is entirely fitting that government use tax policy to encourage behaviors that enhance the common good — think reduced tax rates on capital gains or tax deductions for mortgage interest. Taxing cigarettes till it hurts is in the short- and long-term interest of Arkansans.