Most of the programs that were to be funded by a hike in Arkansas’ tobacco tax either haven’t seen the money or have been 
underfunded since the increase took effect, an advocacy group said in a report released Thursday.
Only five of 23 programs that were expected to be funded by a 56-cent increase in cigarette taxes in 2009 have been fully funded, Arkansas Advocates for Children and Families said its report, “The 2009 Tobacco Tax: Was Children’s Health Care the Big Loser?” The report noted that the tax increase has brought in an additional $80.5 million in the first year, more than the state expected.
“Despite ample new revenue from the increase, some programs promised a part of the new money haven’t seen a penny of it,” the report said.
Lawmakers approved the tax increase and Gov. Mike Beebe signed it into law, which took effect March 1, 2009. The new money was intended to fund the startup of a statewide trauma system and a host of other health care programs, including the expansion of the ARKids First insurance for low-income children.
But the tax increase went into general revenue and wasn’t directly earmarked for any of the health initiatives, and the money was used to make up for declining state revenue due to the recession.
Beebe said many of the programs included in the health package suffered the same cuts that other agencies did when he cut state agencies’ budgets last year.
“(Arkansas Advocates) have the luxury of looking at one part of the budget. I don’t have that luxury,” Beebe told reporters. “I have to look at the whole budget. I have to look at everything. From prisons to human services to ARKids First to education, to colleges and universities.”
“The money rises and flows based on what money we bring in,” the governor added. “They knew that at the time it was passed.”
Two programs, the ARKids First program and an electronic health records system, have not received any money from the tax increase. A program offering substance abuse treatment services for pregnant women and adolescents was not funded in 2010, but Department of Human Services Director John Selig has indicated the program will proceed in March, the report said.
Beebe said he was disappointed that the ARKids expansion could not be funded. A spokesman for Beebe said the electronic health records system was funded using federal stimulus dollars instead of the tobacco tax revenue.
The group, which has pushed for tax cuts and expanded programs for low-income Arkansans, urged the state to fully fund the package of health programs. The Legislature convenes for next year’s session beginning Jan. 10.
“Families who would benefit from these investments are worse off today than they were in 2009,” the report said. “Unlike the state, families have no more room for cuts and have no money in reserves. We must move forward on the ARKids First expansion and substance abuse treatment for pregnant women and adolescents.”
Beebe said funding for many of the programs, including the Trauma System, increased over the year as the state’s economy rebounded.
“There’s more and more of these programs being implemented. Whether it’s the trauma system, health centers, more and more of that money is flowing. We’ll operate in a balanced budget,” Beebe said.
By ANDREW DeMILLO
Businessweek
