Record $26M Spent on Defeated Tobacco Tax Measure in Montana

Initiative 185 was the most expensive ballot issue in Montana since at least 2002

By Matt Volz
Sign encouraging people to vote for I-185 near Kalispell Regional Healthcare in Kalispell. Justin Franz | Flathead Beacon

HELENA — The $26.1 million campaign over whether to keep Montana’s Medicaid expansion program alive by hiking the state’s tobacco taxes was the most expensive ballot issue in Montana since at least 2002, and likely in state history, according to reports.

The hefty price tag was driven by one tobacco company that spent heavily in Montana and in South Dakota to successfully defeat tobacco tax ballot measures earlier this month, campaign finance reports filed Monday with Montana’s political practices commissioner show.

The $17.2 million in cash, loans and in-kind donations from Altria Client Services, the lobbying arm of the company that makes Marlboro cigarettes, made up 98 percent of all the contributions to Montanans Against Tax Hikes, the committee formed to defeat the ballot measure.

Altria spent at least another $6.2 million to defeat South Dakota’s proposed $1 tax increase per 20-cigarette pack. The revenue generated by that tax increase would have gone toward lowering tuition at South Dakota’s four technical institutes and toward workforce training.

The Montana proposal would have raised cigarette taxes $2 a pack and taxed vaping products for the first time to partially fund the state’s cost of the Medicaid expansion program that provides 96,000 low-income adults with health coverage. The program will expire in 2019 unless state lawmakers extend it.

“The proponents tried and failed to bypass the Legislature and permanently lock into place a program designed to be re-evaluated,” said Charles Denowh, the treasurer of Montanans Against Tax Hikes.

Advocates of the measure, mainly hospitals and health professionals, raised $8.6 million, which is the second-highest amount collected by a Montana ballot committee since 2002, according to data from the National Institute on Money in Politics. But it was still just about half of what the anti-tax group raised, and not enough to counter the onslaught of television, radio and internet ads advocating against the tax hike.

Amanda Cahill, an American Heart Association lobbyist and the pro-tax committee’s spokeswoman, has said the tobacco industry’s only interest is in protecting profits, not Montana’s budget.

The $26.1 million raised is the most for a Montana ballot issue and the fourth-highest in the nation for a tobacco tax ballot measure over the last 16 years, according to the National Institute on Money in Politics, whose data does not go any earlier than 2002.

The top three most expensive tobacco tax ballot measures were in California in 2016, 2006 and 2012.

With the Montana and South Dakota measures defeated, lawmakers in Wyoming are planning to revisit a proposal to increase the state tax on tobacco products.

An interim legislative revenue committee on Wednesday will look at legislation to increase the state tax on cigarettes from 60 cents a pack to $1.60 a pack, which failed in last winter’s budget session along with several other tax increase proposals.

In recent years, the state has seen revenue from its mainstay minerals extraction industry decrease to the point that lawmakers have been forced to look at new ways of raising revenue to meet basic government services like K-12 education.

The Wyoming Legislature convenes in January.