The Dayton administration released its heretofore secret plan to fix its botched Vikings stadium funding scheme today. The only surprise is that it didn’t meet Dayton’s description last week that his secret plan would be “something that you’d never even imagine.”
It turned out to include a plan to take a fiscal hammer to smokers. Again.
The plan was unveiled at a Capitol hearing today and includes $24.5 million in one-time revenues from a tax on the current cigarette inventory, MPR’s Tim Nelson reports.
DFLers had already targeted smokers by considering tax bills with cigarette tax increases. A House version was to increase the tax by $1.60 a pack, although Senate Majority Leader Tom Bakk says the final tax could match the $2.52 per pack rate charged in Wisconsin. That’s $1.29 more than Minnesota assesses now, the Associated Press says.
It’s understandable that Dayton would turn to the cigarette tax. Smokers, many of whom are poor, aren’t much of a lobbying threat, and it’s an easy sell under the excuse that it will force more people to quit. It’s a health issue, not a revenue issue.
But it’s surprising how quickly Gov. Dayton caught tobacco tax religion.
“You raise the price of a pack of cigarettes $1.50,” Dayton said in a 2010 gubernatorial debate, “that’s money out of the pockets of working people and poorer people, and that means kids don’t have as much to eat or don’t have the same quality of food. Those are addictions, and I think you treat addictions as addictions and you don’t penalize the people who are dealing with them economically.”
Enter the “health” argument. In March he told MPR that it’s about health not revenue.
“I believe we want to make taxes fairer not more regressive but it serves other purposes,” Dayton said.
Now, it’s serving another purpose — paying for a new football stadium, pretty much the scenario he decried in 2010.
In many ways, the politicians at the Capitol are trying to recover from several bad decisions of the last two sessions. One, of course, was a stadium funding scheme that many analysts said wouldn’t work. But the more serious one is giving away the 1998 tobacco trial windfall.
In 2011, the Legislature decided to spend $1.2 billion over the next 20 years by selling off the windfall with “tobacco bonds.” In exchange, the state got about $750 million to close an immediate budget shortfall. $117 million of that was set aside to pay for the cost of doing it. Do the math on all that.
It was a bad deal that provided an immediate political gain for legislators — making the the budget deficit disappear without raising taxes prior to an election, an election the ruling majority went on to lose.
The situation also shows a deeper problem that’s infected Minnesota for years: the lack of a sustainable vision, especially where anti-tobacco efforts are concerned. Having won the tobacco settlement, the state started an aggressive program to curb smoking, then eliminated it in 2003. Then it increased the cigarette tax to balance the budget and cut smoking, then it sold the tobacco settlement, then it turned to smokers for more money.