Fairbanks, state budgets hurting as tobacco users kick the habit
Published Sunday, September 7, 2008
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Stumble It!FAIRBANKS — Declining tobacco sales are putting a damper on the city’s budget.
Cigarette smoking has dropped by more than 21.5 percent since 1996, according to the Department of Health and Social Services.
While the state continues to bring in millions of dollars of tobacco tax money each year, smaller municipalities are having to look elsewhere for dependable revenue.
Alaska has the highest per capita consumption of tobacco and the seventh-highest tax rate on cigarettes at $2 per pack. Last year, the state brought in $72.6 million in tax revenue from cigarettes and other tobacco products tax revenue.
The Fairbanks North Star Borough managed to bring in almost $1 million in tobacco tax revenue, but the city of Fairbanks earned little more than $625,000.
While state and borough governments may not be worried about fewer sales, the city of Fairbanks is constantly trying to find alternative funding to keep up with growing expenses.
“When we project our future budgets, we also have to project tobacco sales to be declining,” Fairbanks Mayor Terry Strle said.
In 2004, tax revenue from tobacco sales was at $838,666 but has steadily dropped and is predicted to be at $514,425 by 2011.
City expenditures are steadily increasing, but many revenue sources are steadily decreasing.
In Wednesday’s finance committee meeting, Fairbanks Chief of Staff Pat Cole noted that budgeting for the 2009 and 2010 fiscal years was going to be a “daunting task.”
“Barring any new revenue, we might need to look at ways to cut expenses,” Cole said.
City officials aren’t asking the public to light up a cigarette to raise money, but they are looking elsewhere for revenue.
“When we look at our projections, we are unfortunately in that constant mode of revenue development, and the tobacco tax is just another reason why we are constantly searching for alternative funding,” Strle said.
In Fairbanks and the vicinity, 21.5 percent of the population smokes, according to the Alaska Behavioral Risk Factor Surveillance System survey.
In the city, tobacco consumers are nailed with four different taxes from the federal, state, borough and city levels.
Federal taxes amount to $0.39 per pack. The state of Alaska has a statewide tobacco tax in the amount of $2 per pack. The Fairbanks North Star Borough has an 8 percent tax for distribution of tobacco.
The city of Fairbanks also has an 8 percent tax.
At the Great Alaska Tobacco Company, Manager Joanne Taube is seeing a shift in her sales.
“I’m noticing a decline in cigarettes and more people are rolling their own tobacco because the prices are higher for cartoons of cigarettes than bulk tobacco,” Taube said.
The average cost of a pack of cigarettes is about $6. For a 10-pack carton, the cost is about $55.
“The biggest thing hurting our sales is the economy and fuel costs. It’s really making it impossible to afford cigarettes, and it’s making people cut back,” Taube said.
“Besides, our younger people are more educated and less younger people smoke or they are buying alternative cigarettes that have no additives,” Taube said.
The irony is that the safer cigarettes actually cost more than a regular pack.
“By the time a regular pack gets to our store from the manufacturer, consumers are paying about 75 percent of the cost in taxes,” Taube said.
State tobacco revenue has increased significantly due to recent rate increases but not because people are buying more tobacco than normal.
“The importance behind all our cigarette tax increases is because Alaska has a very high consumption of both tobacco and cigarettes,” Johanna Bales, deputy director of the Alaska Tax Division, said.
According to the Department of Health and Social Services, approximately one-quarter of Alaskans smoke cigarettes.
Last year, 710 million individual cigarettes were sold in Alaska, which brought in $72.6 million in revenue, according to the Tax Division’s 2007 Annual report.
The state tobacco revenue is designated for three funds. Last year, $27 million went to the state’s school fund.
About $42 million went to the general fund and from there, $3.2 million went to the Tobacco Use Education and Cessation Fund.
This strategy of increasing taxes on tobacco is meant to control and reduce tobacco consumption by making it difficult to buy.
It also helps consumers quit the habit.
“These days, consumers have no choice but to pay or quit smoking,” Taube said.
Community Discussion
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just pick another sin to villanize and tax. how about a soda pop tax?
The City of Fairbanks will start a $2.00 tax on every roll of toilet paper. This will be to defray the expences involved with maintaining a fleet of vehicles so Fairbanks may continue the practice of employees using city vehicles for personal use.
According to the Department of Health and Social Services, approximately 100% of Alaskans use toilet paper. This strategy of increasing taxes on toilet paper is meant to control and reduce toilet paper consumption by making it difficult to buy. It also helps consumers quit the habit. “These days, consumers have no choice but to pay or quit using toilet paper”. Other sources of revenue to continue the City of Fairbanks personal vehicle use program in the distant future are taxes on soap, milk, and babyfood.
The City of North Pole is looking at this as being a possible boom to the North Pole economy. According to North Pole officials "We will be working with vendors to assure there is enough toilet paper available in the Great City of North Pole for everyone".
We could always raise the tobacco tax to make up for the smokers who quit. Maybe it would inspire more to quit. Wouldn't break my heart. Smoking isn't a vice that is ok in "moderation". It kills, it destroys and it takes loved ones out of our lives prematurely. I have lost several loved ones to complications from smoking. I used to smoke, but chose to quit when I chose to start a family. I want to be around for my children and their children.
I always get a giggle inside when I hear someone say "Well yes I smoke, but at least I smoke lights." What, is there a cancer light? Face it people, you're still smoking. I don't hate smokers, I hate what smoking does to human bodies.
Eh. They'll come for something that's not good for us next. Let's not speed the process by handing out ideas.
fbksmom - I'm sorry for your losses. It's always tough to lose someone and you have my sympathies.
That's not the point here though. The point is that part of the loss of revenue is because of higher taxes. Raising them more would mean even less money. I think there are likely many places who are looking at taxing themselves right out of having something to tax - and then they have to look to something else. And it may just be something that you enjoy. Smoking isn't the only vice out there that is dangerous.
Heh, sad that our city's budget is partly based off of a commercially exploited drug. I say raise the taxes more to milk off the last of the remaining smokers and maybe the poor folk will stop wasting their money on them smokes. Tobacco isnt a necessity so why complain about taxes on them? People are quitting and thats a good thing.
Pretty good hairbrain!
Soda is a good idea for the next sin tax. I don't drink that, and never bought much for the kiddos...4th of July and stuff....
More money, more money!!!
Does the hairbrain hurt yet?!
corinne, when I read about the city employees using the city vehicles for personal use, yes my hairbrain hurt, lol.
Good one, hairbrain! Tobacco tax revenues are down....in part to more people quitting smoking.....also....more and more people roll their own.....also.....lots of people have their relatives or friends send them cigarettes from states with very low tobacco taxes, I'm talking about six or seven cartons at a time. If you look at cigarettes sold, per capita, in states like Virginia and New Hampshire
you would be assuming that everyone in those states smoke. The truth is that people in Mass. and other high tax states drive to New Hampshire and buy in bulk, it's a short trip and saves a lot of money.
Can all the smokers put it to a perspective? Quit and live another 20 more years without your created profit.
It ain't always so, Wisechief. Because of the governments campaign against smoking; people belive that if someone smokes they will catch cancer and die soon. Not true. My father-in-law died of skin cancer when he was 82, he had smoked since he was 14. His doctor told my wife that his death would go down as a smoking related death even though it wasn't. She said that almost any smoker or former smoker who dies of any type of cancer, goes down as a smoking related death whether it was or not. So much for the stats that the governments put out.
Um, I thought the stated purpose of the exorbitant tobacco tax was to offset the increased cost that smokers supposedly represent to government funded healthcare, and to keep kids from smoking. Nice to see the truth finally come out, even if it IS years after the fact. I'm glad the city faces this problem. Liars.
By the way, you may want to check your facts DNM, there's no such thing as a "safe" cigarette according to the Tobacco Control Alliance.
Gildy, I guess its you and me. My father died of lung cancer when I was only ten and he smoked until his last breath. I soon got the addiction claus when we had to light the cigarettes for him on his death bed. Bad choice.
Legalize and tax that obviously.
Opsamk.. I agree, how silly it seams for our city to be relying on the sales of alcohol and cigarettes to support its infrastructure...
If they threw in a fast food tax in their... we could cover lung CA, alcoholism, heart disease and obesity the big 4 leading causes of death nationally... and maybe then we will have enough cash on hand to keep the street light on this winter!
in there.. :)
andjustice4all has little mind for justice. More for control, yes?
Dana, you are always riding me about contol issues... whats up? Lighten up and stop taking my sarcasm so literally!
The answer is no... I could care less about controlling others! I just like to fight for the underdog! Go Red Soxs!!!
Now I get it... you were the poster who didn't want us to hand out ideas.... and the whole fast food tax... is that it?
Yeah!!! I'm so delighted to hear about the loss in taxes from the decline in tobacco use. That is fantastic news. One of the reasons for the high tax was to offset costs incurred by smokers but also to act as a deterrent and incentive to quit. Yeah. I still find it hard to believe 1/4 of Alaskans smoke given all the known risks.
The federal highway administration is belt tightening too because people are driving less and their budget comes from fuel tax.
I quit this year, I didn't realize it woud cost Fairbanks soo much
Years ago when they started the "tax because it cost the health care system" LIE LIE LIE.. just another income for the tax and spend group. Now they will have to find another cow for their money, and they will.
Anyone with a lick of sense found out real quick that ordering your smokes on line was very easy and you could have the mail man deliver them to your door. Mine came from the old USSR, and at that time I got Winstons for $6.00 a carton, post paid. I am sure there are lots of people doing the same today, not just more people quitting. Yea I quit but not because of some stupid idea that taxing them would stop me from smoking. Junkies will always find the money for their FIX..
I started gwoing my own right here in the city...
Personally I am glad they are hurting for revenue it certainly wasn't helping my revenue either paying there Mafia Taxes.
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user6244, love the highly regarded, peer-reviewed journal articles you cite. if you believe that bs, i've got a great bridge to sell you...
If you're not into the Journal of Theoretics, here's a Nature paper reviewing why cigarettes are bad, why they are addictive, and how they will kill you: http://www.nature.com/nrc/journal/v3/n10...
Has anyone added the figures above? 72.6 million collected.27 million for education.
42 million GENERAL FUND ,3.2 million FROM General Fund spent for cessation fund. Where is the other 3.6 MILLION????? Bonuses for officials for collecting the TAX??????? Tax T. P. or Use DNM oops it scratches !!!
Why is there a consistent lack of willingness to talk about the $100 million plus bank account the city of Fairbanks has. It appears that they are only willing to say it brings in 5% annually. Maybe if they had developed a better investment plan, it could be bringing in more. The fact that it is prohibited by law for the mayor or council to use it without the approval of the people, does not mean the people are not willing to look at how it is handled and question returns. However, when is the last time anyone has heard what is going on with this account. Instead, their is a constant cry to make the people of Fairbanks pay. Maybe they should ask why Valdez how they did it. A much smaller community is sitting on $200 million in it's account.
Where can a smoker go or contact whom, to get the assistance promised, to receive financial aid From Their Taxes, for buying the Very High Priced Drugs deemed necessary to Quit smoking? Is there a City,Borough or State Web Site? WTG allhaileris, for stating the REAL Reason The TAX was Imposed!!
For crying out loud, News Minus. You guys would gripe if you were hung with a new rope. You should be celebrating that fewer people are smoking. How come we never hear you complain that the budget is too high?
I admit to feeling some satisfaction from this article and the responses posted below it. I recall back in 1999 the Republicans demanding a new revenue stream, but selling it on the grounds that it will "help people quit". I also remember huge numbers of projected revenue, and to hear those numbers are in decline makes me chuckle. So, what have we learned from this article?
1) The Republicans are the "tax and spend" party.
2) The Republicans want to control people through their wallets.
3) Counterintuitively, it seems the Republicans are unhappy with the result of their tax which is, surprisingly, their stated goal.
For all who have quit smoking (and chewing).....way to go!
For those still trying to quit or considering doing so, please keep at it!
oh my gosh, quick... lets tax something else... oh.. how about shoes? maybe that will help my girlfriend cut back.
I smoked for just over 20 years. It took many tries but I finally kicked the habit 5 years ago.
When you consider that a pack a day habit, at $5 a pack equals out to a savings of $1,825 a year, times 5 years, I've saved almost $10,000 so far. That's a nice boat. I think I'll treat myself to one soon.
PS: the only reason cigarettes are still legal, is because of all the money the gov reaps in from them. I also think some number crunchers decided by having more smokers, and shortening lifespans, the amount paid out in soc security is much less. In any case, it's one of the reasons I detest our hypocritical gov so much. Forcing grown adults to wear seat belts or pay fines, and allowing tobacco sales, even with the surgeon generals warnings, so they can collect the taxes.
Sickening. So fine, I quit smoking, and I don't let them see me without a seat belt on. Na Na na!
When chocolate begins to be taxed, watch out everyone!
Lief Fenno
Care to explain why despite 20+ years of a reduction of tobacco use is not reflected in reduction of cancers especially with any cancer associated with smoking?
Dose makes the poison,IMO
The use of tobacco in moderation just like everything else will not cause your early demise despite the shrills from the Health Nazi's who have supported higher taxes that now are putting government services at risk.....
If you actually believe there is a direct link of smoking to getting cancer you off your rocker. Scientist can only show a possible relationship by use of junk science which is far from being a direct link.
Oh and to see just how junk science works ...
Doctors:
A) The number of physicians in the U.S. is 700,000.
B) Accidental deaths caused by Physicians per year are 120,000.
C) Accidental deaths per physician is 0.171.
Statistics courtesy of U.S. Dept of Health Human services and is a conservative number.
Now think about this:
Guns:
A) The number of gun owners in the U.S. is 80,000,000. Yes, that is 80 million.
B) The number of accidental gun deaths per year, all age groups, is 1,500.
C) The number of accidental deaths per gun owner is 0.0000188.
Statistically, doctors are approximately 9,000 times more dangerous than gun owners.
Remember, "Guns don't kill people, doctors do."
FACT: NOT EVERYONE HAS A GUN, BUT ALMOST EVERYONE HAS AT LEAST ONE DOCTOR.
Please alert your friends to this alarming threat.
We must ban doctors before this gets completely out of hand!!!!!
Out of concern for the public at large, I have withheld the statistics on lawyers for fear the shock would cause people to panic and seek medical attention.
http://encyclopedia.smokersclub.com/3.ht...
Warning: Big Tobacco Money is Addictive –
to your State Government
http://www.nocigtax.com/
Hmmm... First I think it's awesome that less people are smoking!! Right on Alaskans because cancer truly sucks.
It bothers me that our state budget is effected in a negative way by people doing positive things for their own lives as well as others. But that's how it all works. I once worked for a republican senator who used attacking the tabacco companies to keep young people smoke free as his big stratagy to win votes - I thought - great, this man really cares! But when we opened his mail - we would see these huge checks from the tabacco industry - the same people he claimed he was fighting against to make that state a better one for our youth.
This all makes me realize - money is all government really seems to care about.
This is just MY OPINION... so please if you disagree don't attack me personally - I just care about people first - and less about taxes and budgets.
You know - there is one way this state and country could become RICH! Illegalize tabacco - it kills! Illegalize alcohol - it kills! Legalize the use and sale of marijuana - a natural medicine that has been helping sick people for ages. Sell it and tax those sales. Hemp & marijuana are far more valuable to this country than we let it be. How sad!
I'd fully support legalizing the sale of small amounts of marijuana and placing a 50% sales tax on it. That would eliminate most budget problems.
Tax fuel oil.....it gets dirty smelly stuff in the air like secondhand smoke and gives us lung cancer and makes the ice melt. The more it costs the less people will use it and the less money they will have for alcohol and tobacco and church and boy scouts and the arts and downtown visions.
Tax cell phones.....at least the kids that don't smoke yet will be supporting the city budget and the more it costs the less people will use it (in their cars maybe)
Tax pet food.....not needed in my food-shelter-cloathing budget. The more it costs the less people will use it and in time we can dump the borough animal control department costs which can be used for gas in those borough vehicles to go get donuts for the Fairbanks police department cause the borough don't have a police department.....or do they?
Tax cable T.V....so those beer drinking smoking couch potatoes can add another cost to their lifestyle that everyone else wants to design for them. The more it costs the less folks will use it.
We aren't running out of money. We are running out of vices.
tobacco stinks and so do the people that insist on using it.
my fathers girlfriend just came from Ca., she smelled so bad. why not place signs around that tell smokers they stink.
WAAAAAAAAAAAAAAAHHHHHHHHHH! Raise taxes loose revenue WHO'DA THUNK IT?
nativegaygirl
You mean like the Nazi's, when they mandated Jews wear the Star of David??
u-6244-
no just to be honest with them, maybe they dont realize their smoke is offensive? cigarettes smell bad and so do the people that use them, now if that comment is offensive to you i am sorry but it is the truth. try getting that smell out of your hair after being exposed to tobacco smoke, its not easy at all.
nativegaygirl; Gosh, yew is so smart-i kin tell by your letter that yew is smart. You must of gone to colege. Kin i be your friend? That way i might be able to think and reason as gud as you does. Oh happy day, to be as smart and profound as nativegaygirl.
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