Big Tobacco lobbies hard on Philly cigarette tax

Posted: July 11, 2014

HARRISBURG - Philadelphia was one Senate vote away from winning its $2-per-pack cigarette tax in the General Assembly on Tuesday.

But after a late-hour lobbying effort by tobacco manufacturers, the senators jammed in a provision setting a five-year expiration for the tax.

So, despite the prospect of delayed public school openings and hundreds of layoffs, the bill was sent back to the House, which had departed for its summer break and may not return until Aug. 4.

That news sent Mayor Nutter, on hand for the deliberations, into a tailspin. He accused Big Tobacco of "trying to take money away from Philadelphia schoolchildren."

On Wednesday, Sen. Jake Corman (R., Centre), chairman of the appropriations committee, dismissed the notion that tobacco lobbyists played a significant role in adding the temporary language.

"This allows us the opportunity to review an unprecedented tax," said Corman.

He added the tax could lead to a reduction in the $2 billion the state takes in from tobacco revenue each year. "As protector of the general fund, I have great concerns about what this could mean for the state," he said.

Corman's reelection campaign has received $12,000 this year from tobacco companies.

It's true that tobacco lobbyists, who have been less visible since Gov. Corbett took office in 2011, worked to kill or scale back the cigarette tax, according to several senators and other legislative staff members.

They intensified their lobbying efforts early in the week, after the legislation returned from the House for a final vote in the Senate.

In an interview Wednesday, Sen. Anthony Hardy Williams (D., Phila.), who has advocated hard for the cigarette tax, said he was told tobacco lobbyists began contacting the Republican leadership early in the week.

On Tuesday, Republicans who control the Senate told Williams they were considering changing the tax to a temporary one, and possibly ramping up the tax gradually rather than instantly going to a $2-per-pack levy.

Williams said he was willing to accept ending the tax after five years, but not a gradual increase.

"At first I was angry, then frustrated," Williams said. "Then I said, 'OK, we need to focus on the mission to get this across the goal line.' "

Williams has not received any tobacco-related funding this year.

Drew Crompton, a top Senate Republican staffer, said ending the cigarette tax after five years was reasonable and "not some kind of conspiracy or craziness that everyone thinks it was."

"I missed the guys in dark suits saying, 'Hi, I'm from Big Tobacco,' " said Crompton, legal counsel and chief of staff to Senate President Pro Tempore Joe Scarnati (R., Jefferson).

Crompton noted that there are several taxes with a set ending date, including the additional 1 percent sales tax in Philadelphia.

Asked why Senate Republicans decided to make the change at the eleventh hour - the chamber approved the tax last week without a sunset provision - Crompton said it was a matter of fine-tuning the bill.

When it became apparent that the tax would become reality, several senators thought it prudent to give themselves the option to reassess the levy after five years, he said.

"The bottom line," said Crompton, "is, I don't see the scandal. And I think it's reasonable that we evaluate the tax after five years."

Scarnati has received $2,500 from the tobacco firm Altria Group this year. He is not up for election until 2016.

The tobacco lobby kicked into action this spring as lawmakers of both parties began discussing a cigarette tax as a way to fill the state budget deficit.

The legislature finalized a no-tax increase budget to the governor last week. Corbett - who has said he will sign the cigarette tax - is expected to act on the state budget Thursday.

Tobacco companies spent $6 million on lobbying last year in Harrisburg and have so far spent $1.7 million this year. That figure does not include convenience stores that sell tobacco products, according to data from the Department of State.

The most vocal lobbyists fighting the city cigarette tax represent Altria, formerly Philip Morris, one of the largest tobacco companies in the world, as well as lobbyists for distributors who sell tobacco products to retailers.

In 2013, Altria spent $395,698 on lobbying in Pennsylvania, according to its financial disclosure reports. In the first three months of this year alone - the last information available - the company spent $88,503.

Altria employs some of the biggest lobbying firms in Harrisburg, including Greenlee Partners and Gmerek Government Relations. Those two firms alone contribute tens of thousands of dollars to state legislators every year.

In all, Altria retains four lobbying firms, all of which declined Wednesday to discuss the cigarette tax. The firms said they were instructed to refer calls to Altria's media relations office, which did not return a call for comment.

A lobbyist for the distributors, Gerald Kupris, could not be reached for comment.

The House is tentatively scheduled to take up the cigarette tax bill on its return.

But House GOP spokesman Steve Miskin cautioned that lawmakers oppose other insertions in the bill made by the Senate, including new hotel taxes for five counties and community revitalization funding that could total as much as $80 million.


aworden@phillynews.com

717-783-2584 @inkyamy

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