Politics, money drive tobacco debate

The tobacco plants on John Isley’s farm could pass for baby spinach right now, nestled in rows under the protection of a greenhouse against the cold of March.

Isley, 34, speaks softly as he explains how debates over tobacco taxes and smoking bans at the state Capitol factor into mortgage payments, crop contracts and how many of these little green plants will be sowed come the first of May.

Already, Isley said, he’s feeling the effects of a federal excise tax increase that takes effect Wednesday and raises the price of a pack of cigarettes by 62 cents.

“Half of this greenhouse isn’t going to be used now,” Isley said as a fan kicked on to maintain the mid-70-degree climate. He had planned to sell that half to another farmer who recently lost his growing contract.

Because prices will be higher at the cash register, tobacco companies expect to sell fewer cigarettes, so they’re buying less tobacco, Isley said.

Tobacco is no longer king in North Carolina. Farmers like Isley are no longer the knights of a realm who had little worry that their industry would wane.

And there is more trouble at the gates: Gov. Bev Perdue’s proposal to raise North Carolina’s tobacco tax by $1 per pack of cigarettes.

To boot, a bill that would ban smoking in almost any building open to the public, including bars and restaurants, could be debated on the House floor as soon as Wednesday.

“I don’t understand how you want to ban smoking everywhere you turn around,” Isley said. “But then they want to add another $1 per-pack tax. If you have all this decline in consumption, you’re probably going to have a decline in tax revenue.”

In terms of dollars and cents, Isley may be right. But the political and public health calculus behind the smoking ban is far more complicated.

* * *

Not much more than a decade ago, any Tar Heel governor would have been laughed out of office for suggesting a tobacco tax increase to a rate above the national average, now at $1.21 a pack.

As for legislators who fancied filing a bill to ban smoking in public places? They may have been accused of smoking something other than tobacco.

Even now, North Carolina is still the top producer of tobacco in the nation, and the industry funnels billions of dollars into the economy.

Fred Bone, a contract lobbyist who works for Greensboro-based Lorillard, recalls peering down from the third-floor galleries into the chambers of the House and Senate when he was a teenager.

“Sometimes you couldn’t see the members on the floor because the smoke had risen up,” said Bone, a one-time legislative page whose father was a longtime lobbyist. Smoke-filled back rooms weren’t merely hyperbole back then.

Now, the General Assembly and all other state government buildings are smoke-free.

So what happened to erode the political influence of the golden leaf?

Advocates on all sides of the debate point to a series of hits over the past two decades, including three major national events:

  • In 1998, tobacco companies settled a lawsuit with state attorneys general over the industry’s marketing practices. In addition to limiting how they can advertise, the settlement prohibits tobacco companies from debating the health effects of cigarette smoke.
  • In 2004, Congress ended the tobacco quota system, a way to hold prices stable by issuing what were essentially licenses to sell tobacco. To sell 100 pounds of leaf, you needed 100 pounds of quota. Holding tobacco quota was seen as an investment, and many non-farmers did so.

When the federal government used money from tobacco companies to buy up quota and end the system, the number of people with a direct stake in growing tobacco fell from about 100,000 quota holders to a few thousand farmers and their families.

  • In 2006, the U.S. Surgeon General issued a report saying there was no safe level of secondhand smoke and concluding that the best way to reduce smoking-related illnesses was to make workplaces and other public spaces smoke-free.

“The debate is over,” Rep. Hugh Holliman tells his colleagues about the health effects of smoking. Holliman, a Davidson County Democrat and cancer survivor, is the chief proponent of the smoking ban.

As health concerns grew over tobacco, the state’s population grew from 7.6 million in 1997 to more than 9 million now, according to the North Carolina State Data Center. People moving to the state, often from the Northeast, fueled a large part of that growth.

“They don’t have this visceral allegiance to tobacco that many North Carolinians seem to have,” said Andrew Taylor, a political science professor at N.C. State.

The same changing demographics helped popularize no-smoking sections in restaurants: Smokers increasingly found themselves kicked to the curb to take a puff. Now, roughly a fifth of the nation — or 45.9 million people — smoke, down from roughly 40 percent in the early 1970s.

Along with a remixed population came new industries. The three pillars of the Tar Heel economy in the 20th century — textiles, tobacco and furniture — declined while new businesses such as drug manufacturers and shipping companies moved in and expanded.

The tobacco industry itself lost some of its political muscle as well, Taylor said. Declining profits and restrictions because of new laws and court rulings curtailed the amount of money tobacco companies could pump into their lobbying operations and political campaigns.

Statewide, contributions from the political action committees that represent Reynolds American, the Altria Group and Lorillard to state campaigns fell from $163,000 in the 1996 election to $129,000 in the 2008 cycle, according to a review of campaign finance figures by the nonprofit Democracy North Carolina.

On the federal level, the decline was more pronounced, the analysis showed. Donations from tobacco companies and their PACs fell from $9.9 million to $2.3 million during the same time frame.

Despite the declines, the companies remain major players in Washington and Raleigh. The upcoming House vote on the smoking ban legislation is expected to be so close that Democratic leaders are uncertain when they’ll hear the bill, holding it for a day when they have the maximum number of supporters on the floor.

“The tobacco companies and their lobbyists are alive and well,” Holliman said.

* * *

Ralph Day has worked at Lorillard for 36 years; his son works for the company’s research and development division. Day served in the Navy and worked for the Guilford County Sheriff’s Department before starting his career with the cigarette maker.

“When you’re looking at jobs and the workplace now, this is pretty much the best thing going right here,” said Day, who does long-term maintenance on the multimillion-dollar cigarette packing machines.

On the factory floor, he and other employees show off the plant with pride, pointing out machines that can churn out 8,800 cigarettes in a minute.

Overhead, cardboard boxes full of the finished product glide along conveyor belts, labeled and automatically tracked to ensure they reach their final destinations.

Like Isley, the farmer, the workers here see the recent spate of tax and regulatory proposals as a threat to a company and an occupation that treats them well.

“When I got hired by Lorillard, I felt like I hit the lottery,” said Ivey Wolf, who has worked for the company for 12 years, a relative short-timer compared with colleagues who are on their third decade or represent the third generation to work at the plant.

Applications flood in by the thousands when Lorillard advertises openings, say workers and executives with the company. The appeal, they say: good pay and benefits.

“I had been working for a place before I came here for 17 years and I had gotten to the point where I couldn’t advance,” said Wolf, who maintains the packing machines.

Day and Wolf are two of an estimated 50,000-plus North Carolinians who work in jobs tied to the tobacco industry, according to a news release by Reynolds American.

State Employment Security Commission figures show about 15,500 people work directly for tobacco manufacturers.

And according to financial statements filed with the SEC, Lorillard pulled in a profit of $887 million in 2008 — the same time banks and auto makers reported massive losses.

At a time when the state’s unemployment rate has climbed into double-digit figures, the Lorillard workers say it makes little sense for lawmakers to threaten an industry that helped build the state.

But the debate isn’t just about jobs.

* * *

For much of the last week, Holly Haynes has called legislators, asking them to support the smoking ban.

Originally diagnosed in 2004 with ovarian cancer, she fought the disease into remission only to have it recur in 2007. She does not blame her own illness on secondhand smoke, but said relatives like her father developed smoking-related cancers.

“Obviously, cancer runs in my family,” she said.

So Haynes isn’t taking any risk with her children. Her teenage daughter is in the process of looking for a summer job.

“I have forbidden her from working in a restaurant because there is smoke everywhere,” Haynes said.

If nothing else, she said, the smoking ban would protect others who can’t afford not to keep their jobs in restaurants and other places where smoking is prevalent.

Some legislators are receptive to her message, she said, but others are entrenched in their support of the industry.

“The argument I’m getting is this thing about tobacco farmers and companies, that we owe some sort of debt to them because they built the state,” Haynes said. “Well, our country was also partially founded on slavery, and we’re not doing that any more. We woke up and got some common sense one day. … Why aren’t the farmers farming something else? They’ve had plenty of time to switch.”

Isley shakes his head when asked if there’s another crop that could yield as much money for his 100-acre farm as tobacco.

“Maybe one acre of strawberries, and if you could have a little stand up on the roadside, maybe that could sustain your family,” he said.


“No. I wish it was,” he said.

So why doesn’t he get out of farming altogether?

“It’s in my blood,” he said. “It must be. It sure wasn’t because I wanted to get up at 4 a.m. every day and go to bed at midnight every night and make less money than my classmates.”

Those economic arguments are losing their hold on elected officials.

“For many people, it’s politically expedient,” U.S. Sen. Kay Hagan said when asked to explain how it came to be that Congress boosted funding for a children’s health insurance program with a 62-cent increase in the federal tobacco excise tax. “They’re not going to be targeted for increasing everybody’s taxes if they tax tobacco.”

Hagan, a Greensboro Democrat who used to be a state senator, and Republican Sen. Richard Burr of Winston-Salem are trying to head off a measure that would allow the U.S. Food and Drug Administration to regulate tobacco and additives to tobacco products. The measure is of particular concern to Lorillard, which specializes in menthol-flavored cigarettes.

“I’m concerned about jobs in North Carolina,” Hagan said.

* * *

Tobacco use costs North Carolina taxpayers $2.46 billion in direct health care costs every year, according to the N.C. Alliance for Health, which supports the smoking ban. Of that, $769 million is in Medicaid costs alone.

Advocates say that even if the ban — or increasing the tax rate — lowers consumption and reduces revenue, the state will save in long-term health costs.

“Tobacco is a legal product,” said Sen. Linda Garrou, a Winston-Salem Democrat and one of the legislature’s most vocal critics of further taxing and regulating the industry. “If we’re going to look at health impacts, then let’s go to all the fast-food restaurants and jack up prices there.”

Supporters of the smoking ban argue that someone eating a cheeseburger doesn’t stuff french fries down the throat of the person in the next seat.

Then again, says Garrou, no one forces people to eat in restaurants where there’s smoke.

Health arguments aside, increasing smoking restrictions at the same time budget writers want more revenue from tobacco taxes doesn’t make sense, she said.

“People look at the tobacco companies as the golden goose,” she said. “The goose can’t lay golden eggs if it’s being choked.”

Many legislators find themselves torn between protecting public health and protecting jobs.

“That’s a tough issue for me,” said Sen. Stan Bingham, a Davidson County Republican who said he’s unsure how he might vote on a smoking ban if it comes to the Senate.

“I’m against the tobacco tax increase,” said Rep. Pricey Harrison, a Greensboro Democrat. “I feel it’s pretty regressive,” she said, explaining that it would hurt people with lower incomes more than others.

That said, she is a co-sponsor and supporter of the smoking ban.

Bone, the lobbyist, said working for companies such as Lorillard gets harder ever year. But there are plenty of good arguments left on tobacco’s behalf, he said. He likens protecting the rights of smokers to a minority rights issue. And then there’s the economy.

“For us to be restricting a product from one of the industries that built this state, what message does that send to industries we’re trying to recruit here?” Bone asked.

“Times change,” Holliman said, sitting in his office an hour after his bill cleared its last committee hurdle. “I certainly would agree with anyone who says tobacco companies have been good to the state. But people are more aware of the health effects now, and I think people have a right to a healthy environment.”

Source: News-record

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