Anne Landman's Collection
Colorado Ballot Measure
Abstract
In this 1994 Lorillard memo, James Cherry (Associate General Counsel for Lorillard) describes the industry's strategy to defeat a citizen-led ballot initiative in Colorado to increase the tobacco tax and earmark funds for tobacco control. The industry's "alternative initiative strategy" invloves placing a slightly smaller tobacco tax measure on the ballot whose funds are earmarked specifically to non-tobacco related programs that the industry feels are "worthy and attractive," in order to keep any money from going to tobacco control. Cherry says,
"In Colorado [to fight the citizen-led1994 tax proposal], our choices are three:
1) Mount a campaign in opposition to the proposition,
2) Gather petition signatures, qualify for the ballot and campaign for a competing proposition which, though it would involved volunteering for some additional tax, would be much less tax than one which would be earmarked for crime prevention (or some other worthy and attractive purpose), but not for antitobacco programs;
3) Do nothing and accept the tax and the activity it may fund."
Thought it's now ten years old, this same exact tobacco industry strategy is being used right now in 2004 to fight a citizen-led tax initiative in the very same state: Colorado. Colorado citizens have proposed a ballot measure that would raise the cigarette tax by 64 cents per pack and put 16% of the funds toward tobacco control programs. After that effort became public, Colorado State Representative Bob Hagedorn introduced a competing bill (HB 1410) that would raise the tobacco tax by 50 cents and fund a temporary Medicare drug discount card reimbursement program, childrens' health care and a state insurance plan called Cover Colorado. Hagedorn's bill scrupulously avoids funding tobacco education and cessation, or other tobacco-related public health programs.
Cherry also acknowledges that, left alone, voters tend to vote approximately 70 to 30 percent in favor of measures regulating tobacco, and that the "immediate voter attitude" is that "the taxation of tobacco in order to fund health care is a proposition of almost mathematical elegance..." The memo discusses how the industry can overcome this huge number of voters favoring tobacco control measures.
Fields
- Quotes
It is probable that in November there will be a Colorado ballot item for a $.50 per pack tax increase to fund indigent health care and a comprehensive state antitobacco program, which will include education, advertising and a new state agency devoted to tobacco regulation.
We have addressed a good number of state antitobacco ballot measures over the past fifteen years, of both the tax and restrictive smoking variety. Over this period of time determinations of whether and how to oppose ballot measures have become more difficult, because the costs of opposition have risen and, with changing public attitudes, the uncertainty of securing a favorable result has become greater. One other aspect of things has changed over time, and that is the increasingly punishing nature of that which is proposed by the ballot measures.
During this period, early successes in California, Oregon and Florida were followed by defeats in California (Proposition #99:$.25 funding antitobacco program), Massachusetts ($.25, antitobacco program), and Michigan ($.50, public school funding). The loss in Michigan was particularly sobering because a truly good campaign (good organization, management, planning, and first rate television, radio, direct mail and coalition work) did not move the voters one bit. It seemed to us that the result would have been the same in our absence. Our shock here was tempered by the fact that in Michigan we were dealing with a complex, emergency reorganization of public school funding where the voters' choice was between increased sales, business and tobacco taxes or an increased income tax. They resoundingly chose the latter, but clearly it was not a straight tobacco issue.
On straight tobacco issues we are routinely faced with voter attitudes which are about 70 to 30 against us. These attitudes reflect a judgement on the tobacco industry and its product, unqualified by any related political, civic, financial or other thought which might later be introduced by a pollster or in a campaign. Another immediate voter attitude is that the taxation of tobacco in order to fund health care is a proposition of almost mathematical elegance, but this too is an attitude undiluted by other considerations, even those as closely related as views of physicians and medical institutions generally.
Suffice it to say that our task each time is to significantly change the numbers. Experience has taught us that themes such as fairness to tobacco consumers, the evils of regressive taxation, and balance ("enough is enough"), though once potent, are now simply not enough to work the necessary change in voter attitudes. Thus, an initial part of the task is to identify and test related issues which may be persuasive.
In Colorado our choices are three:
1) Mount a campaign in opposition to the proposition;
2) Gather petition signatures, qualify for the ballot and campaign for a competing proposition which, though it would involve volunteering for some additional tax, would be much less tax and one which would be earmarked for crime prevention (or some other worthy and attractive purpose), but not for antitobacco programs;
3) Do nothing and accept the tax and the activity it may fund.
The latter two are untried routes, but should not be dismissed out of hand.
Let us assume that the cost of a campaign would be $4.3 million, and that Lorillard would be responsible for 10 percent of that amount. If the survey numbers look good the decision is easy, but if the numbers are less than good, or if they are not encouraging or if they are downright discouraging, then some penetrating reflection is necessary.
Some considerations: How damaging to us is the prop in Colorado; If we lose, what political spillover will result in other states; If we fight and lose will that loss show a weakness which will increase unhappy spillover; If we walk away and lose will that signal a discouragement on our part which will put blood in the waters of any spillover; Is it important for our smokers that we fight irrespective of result; Is it important politically that we fight for the best numbers we can get, even if we know we cannot win.
We need your help in this decision process, and thus invite your consideration of this memo as an introduction to the attached summary and analysis by Jan van Lohuizen, one of the best pollster~analysts in the business and someone who knows tobacco politics. There is no alternative to spending a bit of time with Jan's material. It is critical to an understanding of things, and your understanding and the ideas and suggestions which it may generate for you are critical for us in an approach to this matter.
Arthur Stevens and I would like to arrange a meeting within the next ten (10) days for an exchange of ideas on this subject, and we will be in touch with your offices to arrive at a convenient date.
J.R.C.
- Company
- Lorillard
- Author
- Cherry, James R., Jr. (PM; LOR, Assoc. General Counsel; General Counsel & VP)J. R. Cherry, Jr. was employed by Lorillard, Inc. and served as Vice President from 1989 to 1993 and then again in 1995; served as Legal Counsel in 1993 and then again in 1995.
- Recipient
- Spears, Alexander White, III (LOR President & CEO)Associated with CTR, used as an expert in the Mississippi case.
- Orcutt, Richard H. (Sr. VP of Sales at Lorillard 1989-1995)
- Orlowsky, Martin L (LOR CEO (1997-present); RJR Sr. VP of Marketing (1985))M. L. Orlowsky was Senior Vice President of Marketing for RJR in 1985 and Executive Vice President of Marketing & Sales for RJR in 1986. (Source: R. J. Reynolds Summary - RJR Liability Notebook). Martin L. Orlowsky worked for RJR Tobacco Co. as Media Director in 1977, Director of Marketing Services in 1980, Group Director of Marketing Services in 1982, and Vice President of Brand Marketing from 1982 to the present. (Source: RJR Who's Who NMLRP)
- Peterson, M. Alfred (Lorillard, Senior VP Financial)Lorillard, Senior VP, Financial and TI Tresurer
- Tedder, Dewey R. (Senior VP of Lorillard 1989-92)D.R. Tedder was employed by Lorillard, Inc. and served as Senior Vice President from 1989 to 1992; served as Senior Vice President (Leaf & Support Services) in 1993 and in 1995. (Source: LOI/LOC Summary of Officer & Directors - LOI/LTC Liability Notebook)
- Region
- Colorado
- Litigation
- Stmn/Produced
- Operation/Project
- Opposing excise taxes
- Type
- MEMO, MEMORANDUM
- Named Person
- Stevens, Arthur Joseph (LOR Sr. VP '89-95 and TI Communications)Served on Lorillard Board of Directors 1985-92, was Senior Vice President from 1989 to 1995, served as General Counsel for Lorillard '93-95. Served on Tobacco Institute Communications Committee.
- Van Lohuizen, Jan (Pollster for the industry)
- Subject
- taxation
- industry activity
- industry influence
- industry recommendation
- industry response
- industry strategy
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