TOPS, Cigarette Tax Combo A Clever Move

One of the more interesting developments of the legislative session was the linking of a cigarette tax renewal to a proposed constitutional amendment dealing with the TOPS program.

The upper-middle class in this state, instrumental in getting the Stelly income tax increase repealed, loves the Taylor Opportunity Program for Students. It pays tuition and some fees for students at the state’s public universities.

Those folks didn’t like the idea of paying additional income taxes, but they love being on the receiving end.

Scholarship funds go to those students who do good work in high school, and family income isn’t a factor. The well-to-do and the poorest all qualify.

TOPS is costing the state $134 million this year, and that is expected to increase to $150 million or more next year because of recent tuition increases.

The scholarship program has quickly become as sacred as the state’s homestead exemption. Legislators have fought off numerous attempts to limit the scope of the program and to establish income as one of the measures by which grants are awarded.

Gov. Bobby Jindal has become one of the program’s staunchest defenders. All elected officials realize the value of the scholarships when election season rolls around.

Jindal got state Sen. John Alario, R-Westwego, to handle legislation that dedicates more money to TOPS from the state’s tobacco settlement. Alario wasn’t happy when the House attached the renewal of a 4-cent-per-pack cigarette tax to his proposal.

Good thinking

The surprise development was necessary because Jindal vetoed the cigarette tax after it passed both houses of the Legislature by the required twothirds vote. And 11 House members switched their votes to kill a potential override of that veto.

Rep. Harold Ritchie, D-Bogalusa, sponsored the cigarette tax renewal and pulled the maneuver that brought it back to life. He said he had help from Speaker of the House Jim Tucker, R-Terrytown, and other legislators.

Jindal was the victim of the end-around. Governors don’t get to veto proposed amendments, so the TOPS and cigarette tax go directly to the voters. It’s an all-or-nothing proposition. You take them both or neither one.

Someone could still sue over Ritchie’s move, and that might pull the cigarette tax renewal out of the package. However, let’s hope it doesn’t happen because both issues ought to be left up to voters.

Let’s go back to 1998, when Louisiana won a $4.4 billion tobacco settlement. It was one of 46 states that sued tobacco companies, seeking money for healthcare costs related to smoking.

Louisiana was to get some $150 million a year for 25 years under the settlement. The first payment was $199 million, and $123 million of that was spent on ongoing state operations.

Legislators had a better idea and in 1999 proposed a constitutional amendment creating the Millennium and Louisiana trust funds. Voters liked the idea of just using interest earned off the tobacco funds and approved the amendment by a 70-30 percent margin.

The Millennium Fund gets 75 percent of each annual installment of tobacco money. The interest from that money goes to the Health Excellence Fund, the Education Excellence Fund and TOPS.

The remaining 25 percent goes to the Louisiana Fund, which benefits education and health care.

The Millennium Fund contains $1.38 billion, and Jindal wants to cap it there. TOPS would get its one-third share of the interest and all of the money above the $1.38 billion.

It’s not as much money as it might have been because Louisiana sold 60 percent of its tobacco settlement share for an upfront $1.1 billion. Officials were afraid tobacco companies might not be able to pay those big annual payments. So yearly tobacco payments are now only $58 million.

If the voters approve the amendment on Oct. 22, TOPS would get $43 million a year from those payments plus the $15 million it already receives from Millennium Fund interest.

The cigarette tax brings in $12 million a year, and that money would go into the Health Excellence Fund.

Governor accepts

Jindal has already chosen TOPS over his usually unswerving anti-tax stand. He didn’t fight the attachment of the cigarette tax to the amendment.

Tucker said the TOPS amendment needed the cigarette tax to get through the House. Democrats, including the Legislative Black Caucus, liked the tax.

The speaker said the caucus might not have gone along with giving TOPS more money because the program benefits many students from upper-income families. They would have probably preferred to see the tobacco settlement money go to health care instead.

The cigarette tax is a no-brainer. It’s already on the books, and it would be a shame to reduce Louisiana’s tax from 36 to 32 cents, already the third-lowest in the country.

Give Ritchie, Tucker and others in on the brilliant plan high marks for finding a way to get the tax issue to the voters. The speaker calls it “a combination of two good policies” which he believes voters will give overwhelming support.

The choice is definitely ours, and that is as good as it gets.

Jim Beam, the retired editor of the Lake Charles American Press, has covered people and politics for more than five decades. Contact him at 494-4025 or [email protected].



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