UAMS Cancer Center funding bill advances; separate e-cig tax bill with possible EITC coming

The House Rules Committee Wednesday (March 6) advanced House Bill 1565, which would help UAMS achieve a National Cancer Institute designation using medical marijuana revenues and by ending the border city exemption for tobacco taxes.

The bill also would raise the legal age for purchasing tobacco and e-cigarette products to 21, though it would exempt members of the military and individuals who reach age 19 by Dec. 31, 2019.

Meanwhile, Senate President Pro Tempore Jim Hendren, R-Sulphur Springs, said Wednesday that he is working on another bill that would raise taxes on e-cigarettes while cutting taxes for lower-income Arkansans, possibly through an earned income tax credit.

House Bill 1565 by Rep. Andy Davis, R-Little Rock, passed the House Rules Committee Wednesday on a voice vote. Sen. Jonathan Dismang, R-Searcy, is the lead Senate sponsor.

Davis later said the bill would raise about $10.5 million a year. That money would be dedicated to a University of Arkansas for Medical Sciences National Cancer Institute (NCI) Research Center Designation Trust Fund. The fund is meant to enable UAMS’ Winthrop P. Rockefeller Cancer Institute to become an NCI research center.

A funding stream of between $10 million and $20 million annually is needed to establish and maintain a center. UAMS is trying to raise $30 million in one-time funds from donors.

The fund was created by Act 181 by Sen. Missy Irvin, R-Mountain View, which did not include funding. Irvin is now a Senate co-sponsor of House Bill 1565. Rep. Michelle Gray, R-Melbourne, a House co-sponsor of Act 181, is also a co-sponsor.

While she is a co-sponsor, Irvin said she could also support other bills that would fund the NCI designation.

“I’m going to be for the one that we can pass,” she said.

The bill would dedicate to the NCI designation revenues from medical marijuana sales taxes and a 4% excise tax. That money has not yet been dedicated to general revenues because medical marijuana has not yet been sold in Arkansas after voters legalized it in 2016.

The excise tax is scheduled to sunset July 1. However, House Bill 1212 by Rep. Doug House, R-North Little Rock, would extend that date to July 1, 2021. It has passed the House and has been referred to the Senate Revenue and Tax Committee.

Davis’ bill also would increase the state minimum cigarette price from 7.5% to 9.5% of the basic cost to the retailer, and it would remove an exemption that sets tobacco taxes in border cities at the same rate as those in the neighboring states. Davis later said that the border exemption is not as important as it once was because states other than Missouri have raised their cigarette taxes or minimum markups.

The bill also would impose a tax of 50 cents per package of 32 sheets of cigarette paper used for hand-rolling cigarettes.

An earlier version of Davis’ bill also included a tax on e-cigarette products. Davis said that part was removed because the bill’s purpose is to fund the NCI designation.

“I think vape taxes will come, but it’s just a bigger, more complicated fight than we wanted to have in this bill,” he said in an interview.

E-CIGARETTE TAXES, EARNED INCOME TAX CREDIT DISCUSSION
Hendren is working on a bill that could combine an e-cigarette tax increase with tax cuts. These potentially could be lower-income tax cuts such as an earned income tax credit (EITC). He said he hopes to file that bill at the end of next week or the week after.

The bill potentially could be revenue-neutral, which he said would be more politically viable.

“There’s a lot of merit in the idea of helping families with kids that are working,” he said.

In November, the Food and Drug Administration and Centers for Disease Control and Prevention announced that more than 3.6 million middle and high school students had used e-cigarettes in the past 30 days in 2018, an increase of 1.5 million students from the year before. Hendren said school administrators are telling him that vaping is becoming an epidemic.

Hendren said he had supported Davis’ removal of e-cigarette taxes because the NCI designation is too important to be stopped by a confrontation over e-cigarettes. He said Davis’ bill has a lot of support in the Senate.

Gov. Asa Hutchinson said he supports Davis’ bill and also would support another bill taxing e-cigarettes.

PROS AND CONS FOR NCI BILL
Dr. Cam Patterson, UAMS’ chancellor, testified in support of Davis’ bill, saying cancer rates have declined nationally over the past two decades but are rising in Arkansas. He said more than 6,000 Arkansans will be diagnosed with cancer this year, and a quarter will die.

There are 70 NCI-designated centers in 36 states, but none in Arkansas. Having a NCI center in Arkansas would allow cancer patients to receive drugs and participate in clinical trials that currently are not available in the state. He said it would add more than $70 million annually to the Arkansas economy and would add 1,500 jobs.

However, Davis’ bill drew opposition from representatives of the American Cancer Society, American Heart Association and American Lung Association. They objected to two provisions.

One provision would prevent local governments from enacting stricter ordinances than laws passed at the state level and rules passed by the Arkansas Tobacco Control Board. Dave Oberembt, the American Heart Association state chapter’s government relations director, said that provision would prevent local governments from banning vape shops from opening across the street from schools, from restricting fruit- and candy-flavored vape products appealing to young people, and from preventing vaping in workplaces and restaurants.

The three health-related associations also objected to a provision that automatically would reduce taxes by 50% and 25% for so-called modified risk products deemed less dangerous by the United States secretary of Health and Human Services. None of those products currently exist, but Shelly Brown with the American Lung Association’s state chapter said the tobacco industry has proven adept at de-emphasizing the harm its products cause, such as promoting “lite” and “low tar” cigarettes.

“This is just another attempt by the tobacco industry to make the products they sell cheaper and therefore more accessible for kids to (buy),” she said.

Davis later said in an interview that the state enforces tobacco laws and needs uniformity statewide. He told legislators he would be comfortable with limiting vape flavors and said advertising should be addressed, but not in this bill, which is focused on providing the NCI funding.