California Cigarette Tax Trails as All Precincts Counted

California’s ballot measure proposing a $1-a-pack increase in cigarette taxes trailed by about 63,000 votes out of 3.9 million cast after the tobacco industry led a campaign that spent $46.8 million to kill it.

Proposition 29 opponents were ahead of supporters about 51 percent to 49 percent with all precincts partially or fully reporting, according to results posted on the California Secretary of State’s website. Some absentee and provisional ballots remain to be counted, including 135,000 in San Diego.

“The tobacco industry has confused California voters by leading them to believe that money would be leaving the state,” David Veneziano, chief executive officer of the Oakland-based California division of the American Cancer Society, said yesterday by telephone. “The money would be used for cancer research in California.”

The plan to more than double the tax to $1.87 a pack pitted Lance Armstrong, the cycling champion and cancer survivor, and groups such as the American Cancer Society against the tobacco industry, led by Altria Group Inc. (MO) and Reynolds American Inc. (RAI) The additional revenue would be steered to cancer research and anti-smoking programs.

“We are very encouraged by the 63,000 vote lead, but there remain a number of absentee and provisional ballots to be counted statewide,” Beth Miller, spokeswoman for No on 29, a Sacramento, California-based group representing tobacco companies, retailers and others, said yesterday in a statement. “We expect to have a better idea of what that universe of uncounted ballots looks like from the counties later today.”

Another Month

The final results may not be known for at least another month. County elections officials have until July 3 to ensure every eligible ballot is counted and until July 6 to report their certified vote counts, according to the Secretary of State’s office.

“While Election Day has come and gone, the meticulous tasks of reviewing signatures on vote-by-mail envelopes and verifying registrations of people who voted provisionally continues in each of the 58 counties,” Secretary of State Debra Bowen, the state’s chief elections officer, said in a statement.

A higher tax might influence the payments that states receive from tobacco companies under a 1998 settlement of smoking-related litigation, Fitch Ratings said June 5. States and counties have about $106 billion of such bonds outstanding, according to data compiled by Bloomberg. The revenue is tied to sales, which raising California’s tax might reduce, Fitch said.

Industry Campaign

The tobacco industry dominated campaign contributions to defeat the ballot measure. Two-thirds came from Richmond, Virginia-based Altria, which put in $31.3 million through its Philip Morris USA, John Middleton Co. and U.S. Smokeless Tobacco units, according to data compiled by MapLight, a nonpartisan research organization based in Berkeley.

Reynolds American’s R.J. Reynolds Tobacco, American Snuff and Santa Fe Natural Tobacco units gave $14.1 million, according to MapLight data. Reynolds, based in Winston-Salem, North Carolina, announced in March that it plans to cut 10 percent of its U.S. workforce by the end of 2014 as cigarette demand wanes.

Opponents said the tax wouldn’t help reduce the state’s budget deficit and didn’t require the revenue it would produce to be spent on research in California.

Supporters, who said the measure would keep children from smoking and save lives, raised about $12.3 million, with $8.5 million coming from the Cancer Society, according to MapLight.

Tax Backers

New York Mayor Michael Bloomberg, the founder and majority owner of Bloomberg News parent Bloomberg LP, gave $500,000 to back the measure. Irwin Mark Jacobs, co-founder of San Diego- based Qualcomm Inc. (QCOM), the biggest maker of mobile-phone chips, gave $30,000. Laurene Powell Jobs, widow of Apple Inc. (AAPL) co- founder Steve Jobs, who died of pancreatic cancer, gave $25,000.

Armstrong’s nonprofit cancer charity, Livestrong, gave $1.5 million. Armstrong overcame testicular cancer and won the Tour de France seven times.

The increase would push the average price of a pack to about $7.50, said Brian Miller, a spokesman for the California State Board of Equalization, the state’s tax collector, citing the nonpartisan Legislative Analyst’s Office.

Consumers pay the highest state tax at $4.35 a pack in New York, according to the U.S. Centers for Disease Control and Prevention in Atlanta. The average state tax is $1.46.

Smoking is the leading cause of preventable death and illness in the U.S., according to the CDC. The agency said California hasn’t raised its 87-cents-a-pack tax since 1998.

To contact the reporter on this story: Alison Vekshin in San Francisco at avekshin@bloomberg.net.

To contact the editor responsible for this story: Stephen Merelman in New York at smerelman@bloomberg.net.

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