Tobacco Documents Online

( ( Utah, page 3 ANTI-TOBACCO FORCES Utah was one of the first states to adopt a so-called "Clean Indoor Air Act" (1976). As a result, anti-smoking forces have had little reason to organize. Recently, however, Salt Lake City's Public Health Director, Dr. Harry Gibbons, has become a very outspoken critic of the existing law and succeeded in adopting a series of amendments in the 1986 legislative session. Gibbons succeeded in gaining support for his activities from the state's health department and elements within the University of Utah. The cancer society, lung association, etc., are supportive but not leading the charge, so far, in Utah. TOBACCO INDUSTRY Brief History of Successes and Problems The state-wide Clean Indoor Air Act was enacted in 1976. There has been little or no enforcement of its provisions. The cigarette tax is currently 12 cents, well below the national average. In 1986, the "other tobacco products" tax was increased to 35 percent of manufacturers' selling price. No municipal taxes are on the books and there are no local smoking restriction laws. Major Issues - 1987 A bill to increase Utah's cigarette tax by 8 cents per pack has been pre-filed. Outlook Enactment of amendments to the Indoor Clean Air Act must be considered likely. December 1986 c

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VERMONT C c PREFACE Advertising promotion for the state declares: "Vermont - A State of Mind." That may be the best description of New England's least populated state. Vermont is different things to different people. It is the last bastion of the conservative, Yankee, rugged individualist. It is also one of the final outposts ot the aging, 1960's counter-culture communists from the affluent suburbs of Boston and New York. It has one of the most active, environmental, no-growth, anti-business coalitions in the country, facing one of the fastest-growing resort industries in the Northeast. In some sections the abject poverty reminds one of news photographs of Appalachia. On the other hand, the conspicuous consumption of "Yuppie" skiers from Boston, New York, and Washington is the fuel for the economic furnace that runs the state. In one state, some of the most conservative politicians in the area are squared off against the avowed Communist mayor of the city of Burlington. In all of these aspects, it is not so different from what we see in the rest of New England--just more extreme. There are approximately 800,000 people living in Vermont. It has a 0.3 percent market share and a 17-cent per pack excise tax on cigarettes, compounded by a 4 percent sales tax. Those taxes are collected on approximately 77 million packs of cigarettes, producing state revenues of approximately $13 million in fiscal year 1985. This represents an increase of 700,000 packs and state revenues of $400,000 since 1984. STATE OVERVIEW Economic Condition Unlike New Hampshire and Maine, the growth patterns in Vermont are more evenly distributed, particularly in the development of resort facilities. In contrast, industrial growth has focused in Chittendon County in the extreme northern part of the state. This growth has focused on the city of Burlington, but in recent months has begun to spread out into some of the other outlying areas of the county. It is likely that this economic growth will continue throughout the 1980s.

Vermont, page 2 Following her reelection, Governor Kunin vowed to continue her attempts to bring foreign investment to the state and opened negotiations with trading partners and developers as far away as Osaka, Japan. The biggest single block to continued economic growth may be the lack of skilled and professional labor forces. However, the construction of a bridge tunnel across Lake Champlain, scheduled to begin in 1987, is likely to provide construction jobs and fuel the continued economic growth of the north. The effect of the economic prosperity on the social and political climates of the state -- and the way in which the pebple and the legislature respond -- will determine whether the growth continues and at what rate. Political Situation Recent Vermont politics send mixed signals. Two years ago, the Reagan landslide swept Democrats out of office across New England and the country. In contrast, in Vermont, for the first time in many years, Democrats gained control of the Executive Office, absolute control of the Senate, and were close enough in the House to elect a Democratic minority speaker. The lack of a strong Republican candidate assured Democratic incumbent Madeleine Kunin a second term. However, the addition of Burlington Mayor Bernard Sanders as an independent resulted in the election being thrown into the legislature. The immediate political concern is who will be Speaker of the House. The Democratic/liberal Republican coalition that elected Rep. Ralph Wright as speaker in 1985 and 1986 appears intact for 1987. However, it is always difficult to elect a minority speaker. Following the election of speaker, the goal will be to get through the legislative session with a minimum of difficulty and get on to the business of running for re-election. Significant State Problems Primary problems are a result of the phenomenal growth and prosperity and the indication that this growth and prosperity is likely to continue into 1987 and beyond. The concerns relate to the environment and the destruction of the mountain forests for the development of resort condominium complexes. Those resorts -- built primarily to allow city dwellers from Boston, New York, and Washington to enjoy the pristine solitude of the Vermont mountains -- are destroying the very mountains they seek to promote. Further, their development is stretching the state and local infrastructures to their limits. (

( ( C Vermont, page 3 These complexes often house in excess of 3,000 or 4,000 people and are equipped with support facilities and entertainment complexes. Volunteer fire departments that satisfied the needs of small, rural communities of 1,000 people are no longer adequate to meet the demands of multiple resort complexes. Similarly strained are the rural water supplies, road systems, and electrical delivery systems. One of the largest legislative concerns will be how much of this growth is enough, what kind of controls can be placed on it, and who should be the arbiter of those controls. In addition to these and other problems associated with overall growth and prosperity, the governor would like to develop some sort of program to relieve property taxes. There are also those who suggest that the question of smoking in the workplace is a major state problem. RESOURCES: STRENGTHS AND WEAKNESSES Tobacco Segments The tobacco family in Vermont is extremely small, and the members tend to have difficulty coordinating their efforts. There is neither an organized wholesaler nor vending association. Even the New England Convenience Store Association does not reach into the state. There is a strong retail grocery association, but very few retail tobacco outlets. Over the years, a number of individual wholesalers have been very responsive to requests for legislative action. However, their lack of organization and coordination has required a great deal of personal contact. This contact is difficult and time-consuming, particularly in the middle of a legislative fight. However, our relationship with the Vermont Retail Grocers Association is such that they have lobbied directly on our behalf and given us access to their members wherever and whenever we have needed it. There is far less acrimony and dissension among the wholesalers in Vermont than in other parts of the region. This allows us to organize and coordinate their activities as required, but we still cannot maintain a consistent level of organization between legislative battles. The burden for that organization must fall primarily on the shoulders of the wholesalers who will benefit from it and not be left to the Tobacco Institute. Business Established business organizations are very influential. The Vermont Chamber of Commerce and the Associated Industries of Vermont maintain active and involved legislative committees and full-time lobbyists; and have developed a consistent, credible, and welcomed presence in the Vermont legislature.

Vermont, page 4 On a variety of occasions, these two organizations have provided the industry with outstanding legislative and grassroots support. In some instances, particularly tax-related areas, they have not been able to support us because our success might mean failure for their own legislative goals. Nonetheless, at no time has either of these organizations suggested that the legislature focus their tax-increasing attentions on the tobacco industry instead of their members. In other instances, such as workplace smoking restrictions, they are happy to support our activities and even take the lead in opposing laws to regulate smoking in the workplace. Supporting these two major groups are other organizations like the Vermont Restaurant and Lodging Association and the Vermont Merchants Association. These have far less influence but have been equally supportive in the past. We can expect that support to continue. Labor During the Republican-dominated years, the minimal influence of Vermont labor waned further. For the most part, labor was not a force at the legislative level. With the return of the Democratic party, organized labor has enjoyed a small resurgence. However, their chief lobbyist Steve Kimball has been brought into the Kunin Administration. While he can now act as an inside advocate and spokesman for a labor-oriented administration, he loses the political maneuverability he enjoyed as an external advocate for labor. We do, however, enjoy good relations with the president and current lobbyist for the AFL-CIO. They are extremely interested in the workplace smoking issue, and are likely to support us during the legislative session. On the other hand, the new labor lobbyist has been contacted by the anti-tobacco groups to act as their counsel in 1987. Fire Groups As a result of our activities in the area of "self-extinguishing" cigarettes, we became acquainted with the Vermont Volunteer Fire Fighters Association. During the past two years we have continued to maintain our contact with that organization. While they have never been called on to act on the "self-extinguishing" issue or other tobacco-related matters, they have indicated a willingness to maintain an open mind and provide us with assistance where possible. Institute Resources We have been able to defend successfully against the anti-tobacco activists by utilizing the resources and manpower of our friends and allies, especially in the hospitality and retail grocery industries. C e

( C Vermont, page 5 However, as our legislative needs increase in Vermont, it is likely that we will have to review continually the need for additional legislative help and the help of other consulting services, such as public relations. As in all of New England, one of our biggest assets in the state is our legislative counsel. His access to both sides of the aisle in both houses and to both ends of the political spectrum has made our overall program the success that it is. ANTI-TOBACCO FORCES The anti-tobacco advocates in Vermont cut across all the social, economic, and political strata of the state. The most credible of their number is Dr. Roberta Coffin, the head of the State Department of Public Health. In support of Dr. Coffin are the members of the Vermont Lung Association, Cancer Society, and Heart Association. GASP and ASH organizations also have chapters in Vermont. Activities of these groups are supported by students from the University of Vermont in Burlington's Public Interest Research Group (PIRG) and a scattering of liberal, counter-culturists left over from the sixties. Our observation of the loosely-knit coalition used to suggest that without the leadership and presence of Dr. Coffin, the remaining members of the coalition would dissolve into a strident and fanatical fringe group. However, their goals are supported by the local press, particularly the Montpelier Times-Ar us; and they have engaged a lobbyist for 1987. Therefore, t ey speak with unwarranted credibility. TOBACCO INDUSTRY Brief History of Successes and Problems When viewed in context, the successes of the tobacco industry in the state of Vermont are enviable. In 1983 the state increased the cigarette excise tax from 12 to 17 cents per pack. The last tax increase prior to that was 14 years earlier. During the 1985 legislative session, the state imposed its sales tax on tobacco products. In 1981 a broad "clean indoor act" was defeated by three votes on the floor of the House. Since then the industry has been successful in keeping all smoking restriction legislation tied up in committee and off the floor. In 1984 we made a timely change in our legislative counsel situation and have been able to continue our success in the two years since the change.

Vermont, page 6 Our immediate problems have been few, and yet they suggest that our future problems will be more serious. They focus on the inability of the extended tobacco family to work as a cohesive unit on those legislative initiatives affecting it. To a certain extent, the industry family is content to believe that it can organize itself and respond overnight. It does not yet recognize that a strong, standing organization will be,essential in the more volatile anti-tobacco climate of the future. Again, some of this ongoing organizational activity must fall upon the shoulders of those who reside in the state, not solely on the shoulders of The Tobacco Institute. Major Issues - State and Local During 1987 there is likely to be a single, well-focused attack by the anti-tobacco advocates in the state on the issue of smoking in the workplace. Two separate pieces of carryover legislation received a great deal of attention during the abbreviated 1986 legislative session and were defeated. The bill in the House was a San Francisco-type workplace ordinance. The other in the Senate was a bill restricting smoking in public buildings. There is some suggestion that the Democratic legislature will be inclined to give the liberal proponents of the anti-tobacco legislation at least a piece of the pie in 1987. Our overall goal is to bring pressure to bear from the organized business and labor communities in combination with our legislative and scientific witness programs to defeat again even the most lenient workplace restriction bills. During these efforts on smoking restriction legislation, it must be remembered that, as a result of tax reform, Vermont will once again sustain a deficit. There is currently no indication that tobacco tax bills will be pushed by the legislative leadership or the governor during 1987. Nonetheless, the fact that the state needs money means that the possibility of increasing the cigarette excise tax must be a concern to us. Finally, the large volume of adverse publicity on smokeless tobacco issues has raised some questions about minimum sales age and labelling of smokeless tobacco products in Vermont. It is possible that this type of legislation will become part of the Department of Public Health's legislative agenda for 1987. To date, local smoking restriction activities in Vermont have surfaced only in Burlington. If the organized anti-tobacco movement should recognize the local level as fertile ground, it is likely to move from the city council in Burlington to other locations. Depending on that response, it may move quickly to the town meeting format on town meeting day in either the spring or fall. An organized effort to place questions of smoking restrictions on the ballot on a town meeting day could have a devastating effect on the industry in Vermont. C ( e

( ( ` Vermont, page 7 Outlook The outlook for the tobacco industry and its legislative program in Vermont is not unlike that in the other five New England states. Our supporters are brow-beaten and frustrated. We have brought them to the legislature time and time again to explain the economic impact of a particular legislative action on their industry only to be ignored and in some cases insulted. Our allies beyond the tobacco industry are generally reluctant participants in our legislative battles and would prefer that we fight them without their support. However, with each succeeding year and each succeeding presentation before the legislature, the industry's credibility, particularly on tobacco tax issues, has grown stronger. In 1987 we will attempt to transfer some of that credibility from the economic issues to the emotional smoking restriction issue. December 1986 C

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C VIRGINIA c PREFACE Virginia has a 1986 population of 5.3 million. The state is a mix of urban and rural economies and also has one of the largest ocean ports in the world. There are several sub-regions of the state: The eastern or Tidewater section, the central or Piedmont section, and the western or Mountain section. The area north and west of Fredericksburg is known as Northern Virginia. There are four major metropolitan areas in Virginia: 1. The Virginia counties in the Washington D. C. area - population, 1.3 million. 2. The Richmond area, including independent cities of Petersburg, Hopewell and Colonial Heights - population, 875,000. 3. Norfolk/Virginia Beach/Portsmouth/Chesapeake/Suffolk/ Newport News/Hampton and environs -- population, 1.25 million. 4. Roanoke area - population 250,000. Tobacco is grown in the central, and southern areas of Virginia. The state's market share is 2.8 percent. STATE OVERVIEW Economic Condition and Outlook The economy of Virginia is robust, with strong growth occurring in the manufacturing and service sectors. In addition, a growing number of companies are moving their corporate headquarters to the state. The City of Richmond is headquarters for 14 of the Fortune 1000 companies. Particularly strong growth continues to occur in the Washington Metro area, particularly Fairfax County. The State of Virginia ended the 1984-86 biennium with a budget surplus of $31.6 million. Other available funds and current projected surplus result in approximately $42 million more. The revenue flow to state government is clearly healthy. In the first year of his administration, Governor Gerald L. Baliles convened a Special Session of the General Assembly for the purpose of considering and approving additional highway construction (10-year need estimated at $5 billion) and passing taxes to raise this revenue. A tax package was approved, and takes effect January 1, 1987. The package is expected to raise approximately $400 million per year.

Virginia, page 2 The state expects to receive a windfall of $187 million in state income taxes as a result of federal income tax reform; however, the Governor has indicated a desire to return most or all of this, in some way, to the taxpayers. Political Situation Virginia has a Democratic controlled state legislature, and a Democratic Governor, Lieutenant Governor and Attorney General. The Lieutenant Governor, L. Douglas Wilder, is a black, and the Attorney General, Mary Sue Terry, a woman. Wilder is the highest ranking black elected state official in the country. Virginia's two U.S. Senators are Republicans, while the ten congressional seats are divided evenly between the two parties. The Virginia General Assembly is comprised of 140 members (40 Senators, 100 Delegates) with a 2 to 1 Democratic majority. The House of Delegates has 64 Democrats, 33 Republicans and 2 Independents. The Republicans lost two seats in the House during the 1985 general election. The Senate has 31 Democrats and 9 Republicans, including a Republican elected in a special election in August to fill the seat of the late Senator Edward E. Willey. During the summer of 1986, Edward E. Willey, D.-Richmond, the President Pro Tempore of the Senate, passed away. Senator Willey had served in the Senate since the early 1950s, and was the Chairman of the Senate Finance Committee. He was unquestionably the most powerful member of the General Assembly, and was strongly opposed to state or local tobacco taxes. The new Chairman of the Appropriations Committee is Senator Hunter Andrews, D.-Hampton, who is also the Majority Leader. Neither Andrews nor any other Senator appears likely to wield the power once held by Willey. As a result, the Senate may become less predictable. In addition, Willey's sympathetic views of the tobacco industry are probably not as strongly held by the new Senate leadership, in part due to the lack of a strong tobacco farming or manufacturing presence in Senator Andrews' district. In general, Virginia is a pro-tobacco state. This has been brought about over the years by positive industry campaign and hard work at the grassroots level by industry participants. In addition, the news media in the state is generally more pro-tobacco than in other tobacco-producing states. Significant State Problems The most significant state problems are: a. Local "fiscal stress," which is a term being applied to the C4h11 revenue shortfalls of local governments which arise, according tdo the localities, because of the insufficiency of local tax bases . to raise revenue sufficient to fund programs mandated by the state. Some localities are affected severely, according to a recent legislative study; others are hardly affected at all. C (

( ( C Virginia, page 3 No particular program has been advocated as a solution, but it seems likely that a trend toward delegation of additional taxing powers to municipalities may result. b. The state prison system needs additional facilities. This will require an expenditure in excess of $150 million. Possible sources of funds for the State are: a. The income tax windfall, estimated at $187 million, which will accrue to the state, as a result of federal income tax reform. The Governor has indicated that this money will be returned; however, Republicans are attempting to turn this into a partisan issue. b. A state-operated lottery, which was actively promoted by a number of influential members of both Houses during the 1986 Special Session. Estimates of net revenues from a lottery range from $70 to $300 million. The question could go to voters in the form of a referendum. In addition, tort reform will be considered by the 1987 General Assembly. A legislative subcommittee studying the issue has approved proposed legislation which includes caps on non-economic damages, sanctions for frivolous claims, changes to the exemptions from jury service, structured payments for certain judgments, and other elements. RESOURCES: STRENGTHS AND WEAKNESSES Tobacco Segments Virginia is the second largest cigarette manufacturing state and ranks fourth in the growing of all types of tobacco. Two major cigarette manufacturers are represented with facilities in the state. Philip Morris U.S.A. is headquartered in Richmond. American Tobacco Company is in the process of moving administrative headquarters from New York City to Richmond. In both instances, the corporate headquarters of these companies are located in the New York City area. The tobacco grower segment of the Virginia economy is relatively large and has been extremely helpful in prior years in combating anti-tobacco legislation. The wholesale segment of the industry is very active in the state with strong associations at the wholesaler and vendor level. In each instance the association maintains a full-time state lobbyist and works closely with the Institute.

Virginia. page 4 Business Virginia, like most southern states, is very business oriented and is also a right-to-work state. The Virginia General Assembly is very cognizant of business problems and sympathetic to legislation that fosters support of business. The Virginia Chamber of Commerce, the Virginia Manufacturers Association and other business groups have been helpful to the tobacco industry in combating anti-tobacco legislation and sentiment. Labor Organized labor has comparatively little political influence in the state, although unionization of companies continues to grow. Since Virginia is a right-to-work state there are many facilities with an open shop operation. Fire Groups There are several fire groups in the state, but there seems to be little enthusiasm or current need for any strong alliances at this time. Institute Resources The major T. I. resources in the state are tobacco growers and allied farm groups, employees of cigarette and other tobacco manufacturers, and the wholesale and retail element. In addition, there are a number of leaf tobacco companies headquartered in Virginia that provide help when needed in key political situations. There are a number of supplier companies headquartered in the state, all with Virginia operations that, when called upon, are helpful in combating anti-tobacco legislation at the state and local level. ANTI-TOBACCO FORCES Anti-tobacco activity in Virginia is negligible except at the p local level in the northern Virginia counties of Fairfax and ~ Arlington; there is currently restriction activity in the City of Q Winchester. There is little if any anti-tobacco activity in the ,~ Virginia General Assembly. Primary anti-tobacco groups in the Ati state are the Virginia affiliates of the Lung, Cancer and Heart ~ Associations. (

( Virginia, page 5 TOBACCO INDUSTRY Brief History of Successes and Problems Traditionally, there have been more problems with cigarette taxes than restrictive smoking legislation. One of our major problems is the ability of cities and certain counties to tax cigarettes. This ability arises through general taxing power conferred by charters to cities and towns. A 1985 law gave counties the ability to request charter legislation, which, from a tobacco tax standpoint, gives them precisely the same powers as cities and towns. This situation, coupled with'a growing legislative perception that past distinctions between cities and counties are no longer valid, is likely to create future problems. At the state level, there are occasional efforts to increase the state cigarette tax (at 2.5 cents currently the second lowest in the country) as well as to enact legislation enabling counties to tax cigarettes, separate and apart from the county charter phenomenon. Doubling the state tax was proposed, but not seriously considered in the 1986 special session on transportation funding. During recent sessions, restrictive smoking bills have been introduced, usually aimed at state office buildings. In 1983, a bill was introduced to require a "self-extinguishing" cigarette, but it was soundly defeated in committee. Major Issues - State and Local The major tobacco legislative issue in the Virginia General Assembly will continue to be taxes, although restrictive smoking legislation will become more popular as public sentiment for this type law increases across the country. The primary thrust of local tobacco legislation will also continue to be cigarette taxes, although legislation to restrict smoking in areas such as municipal buildings, restaurants, etc., will undoubtedly be seen also. Local taxation of cigarettes in Virginia localities often greatly exceeds the state tax of 2.5 cents per package. With the spread of county charters, care must be taken to avoid a backdoor increase in tobacco taxes. The first county charter bill passed by the General Assembly provides some precedent for this, as it was amended to include a provision prohibiting tobacco taxes (Roanoke County, 1986 General Assembly). Outlook The two challenges facing the industry in Virginia will be holding the line on cigarette taxes, both state and local, and ensuring that public smoking bills are not enacted. December 1986

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C WASHINGTON PREFACE Washington state is the focal point of the northwest economy. With a population just over 4.3 million, the Evergreen State has the most diverse economy, the most fluid population and the least predictable politics of the Northwest states. Washington's market share is 1.5 per cent. STATE OVERVIEW Economic Condition and Outlook Washington's economy is still in a state of transition from agriculture and aerospace to a more balanced economy, which now includes computer technology, foreign trade and expanding tourism. Because of the growth of these new industries, the state's population is undergoing change from a traditionally blue collar population to one of more diversity with an increasing percentage of highly educated and trained employees. As examples, the state will soon be the location of three new foreign-owned electronic businesses, will be the headquarters of the largest domestic producer of computer software, is at the forefront of the nation's nuclear industry, and is improving its position as a gateway to Pacific Rim trade. On the other hand, the state's agricultural economy continues to suffer with the timber industry in deep doldrums and farming and ranching suffering the same problems as the.rest of the nation's farmers. This rather schizophrenic economy and the fact that Washington is one of the few states without an income tax, make the state's fiscal picture extremely difficult to forecast, and revenue receipts subject to intensive cyclical changes." Political Overview As there was no gubernatorial election in 1986, the most important activity took place in the legislative elections. In the state House of Representatives, there will be 61 Democrats and 36 Republicans in the 1987 legislative session. This compares to 53 Democrats and 45 Republicans in the 1986 session. One seat in District 6-Spokane, is still undecided. In the Washington state Senate, there will be 25 Democrats and 23 ~ Republicans. District 15-Yakima, is still undecided. - -

Washington, page 2 In the U.S. Senate and Congressional elections, former Carter administration official Brock Adams, a Democrat, defeated incumbent Republican Senator Slade Gorton. All other Congressional incumbents were reelected. Significant State Problems The state's revenue picture is uncertain. To avoid the cycles of funding the state has faced in the past, the Governor has recommended an increase in revenue sources. Also of concern to the state's residents is the water quality in Puget Sound and several eastern Washington aquifers. In addition, state employees have not received a raise in several years and feel the Governor promised them one for 1986. A five percent state employee raise would cost approximately $105 million. Other costly issues being discussed are a state-funded basic health care plan, low income housing and school funding. RESOURCES: STRENGTHS AND WEAKNESSES Tobacco Segments Washington has no tobacco farmers, a declining wholesaler membership, only a small number of vendors and relatively few tobacco company employees. Of those within the traditional tobacco family, the wholesale distributors and the vendors have been increasingly effective in their efforts. Member company personnel have been helpful in the past and continue to improve the quality of their political efforts. Business Washington's one major business organization, the Association of Washington Business, has been ambivalent to our issues in the past. Recently, however, we've begun to receive more interest from them, particularly on the issue of workplace restrictions and cigarette taxes. We have enjoyed excellent cooperation from the Restaurant Association of the State of Washington (RASW), the Washington Lodging Association, some segments of convenience store associations and limited assistance from the Washington Food Dealers Association. Labor Organized labor has been a difficult coalition to build, largely due to a very entrenched labor leadership. Changes are beginning to take place in the labor movement in Washington. f < e

C C . employees). Washington, page 3 We have recently received excellent cooperation from the Bakery, Confectionary and Tobacco Workers Local in Tacoma (there are three other BC&T locals in the state that have not yet "come aboard"), and from the Technical Engineers in Seattle (city We have heard some grumbles about the tobacco industry being "anti-union." However, we appear to be making inroads on the blue collar employees with workplace restriction and tax issues. Additionally, new inroads with labor have been initiated due to recent action by the City of Seattle with regard to city smoking regulations and changes in working conditions. These actions were supplemented by the filing of an Unfair Labor Practices complaint by the city's largest labor union. ANTI-TOBACCO FORCES The major anti-tobacco organization in Washington is Fresh Air for Non-Smokers (FANS). This group has grown, with the assistance of local lung associations, to five chapters throughout the state. It is an extremely vocal group which is becoming increasingly effective at creating an image of a large, populist organization. FANS is also learning from past defeats, and becoming more effective politically. FANS has several officials on its-local boards of directors. TOBACCO INDUSTRY Brief History Since 1975, Washington has had smoking restrictions in the form of Board of Health regulations in the Washington Administrative Code. Last year the legislature passed the Washington Clean Indoor Air Act. The net effect of this act codified the existing regulations, relaxed to requirements that applied to restaurants and imposed penalties for violations. Traditionally, cigarette excise taxes have been relatively high, compared to neighbor states. Outlook: Major Issues - State and Local The tobacco industry was hit hard during the last•session of the Washington legislature. An 8-cent tax increase, earmarked for pollution clean up of Puget Sound, was passed by the legislature. The industry faces more problems during the next session, not the least of which is the workplace smoking issue on the state level, and several local smoking restrictions in Seattle and surrounding King County. Several anti-industry groups have announced plans to introduce workplace smoking legislation on a city-by-city basis in order to "hog tie" the tobacco industry.

Washington, page 4 ` Recently, a measure to regulate smoking in the workplace in the City of Seattle was passed by the Seattle City Council. This measure was met with a protest and the subsequent filing of an Unfair Labor Practices complaint by the Seattle labor community. Additionally, a similar measure of comparable scope was approved in the King County Council. It is expected that 1987 will be an extremely busy year in the state legislature with regard to smoking restrictions and other anti-industry measures. December 1986 C C

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C WEST VIRGINIA C West Virginia's population is just under 2 million. The state's problem of high unemployment is compounded by recent flooding disasters. Unemployment will be a major issue considered by the General Assembly when it convenes in January. The state's market share is just less than 1 percent. STATE OVERVIEW Economic Condition and Outlook West Virginia continues to face the problem of a declining population, attributable mainly to unemployment. The coal industry, the state's primary employer, is in the throes of a deep depression, and that condition will not improve in the near future. Political Situation Adding to the burden is the decline in manufacturing. The governor and the legislative leaders are seeking avenues to improve conditions, but it is a situation which will require time and much effort. Politics, it appears, will be relegated to the background as solutions are sought. A major factor in the unemployment situation is that West Virginia does not have defense contracts. There has been considerable complaint registered with Washington authorities regarding the situation but there has been little, if any, action channeling business to West Virginia. Even though West Virginia has improved its unemployment picture slightly - the state has been in last position for an extended period - the treasury is being drained at the rate of $60 million a year by the state's debt to the federal,government. This certainly compounds the situation for the state's employers. The political picture has not changed much from the 1985 and 1986 legislative sessions. The House membership stands at 78 Democrats and 22 Republicans. In the Senate the score is 27 Democrats and 7 Republicans. The primary issue is whether the House is to be in the hands of conservatives or liberals. It is uncertain how the tobacco industry will be affected by the 1986 election. Some supporters were defeated or declined to run for reelection. However, two legislators, a Senator and a Delegate, who sponsored anti-tobacco legislation in the 1986 session, were defeated.

West Virginia, page 2 Significant State Problems The state generally, and the Charleston area specifically, has been hurt immeasurably by the treatment accorded the chemical industry. Many jobs have been terminated and others are in danger as consideration is given to consolidation and the possibility of sales to other manufacturers. The latest to feel the effects of this weakened economy is the glass industry. Glass plants are either suspending operations or going on a reduced work schedule due to the lack of demand for products. The steel industry also_is feeling the effects of the slowed economy. West Virginia, like many other states, is attempting to attract new industry by offering special concessions in the area of ' taxation and financing. Results of this effort are unknown; only time will provide the answers. RESOURCES: STRENGTHS AND WEAKNESSES Tobacco Segments West Virginia grows burley tobacco. Growing is centered in six counties; therefore, it is not considered'a major farm crop. However, tobacco is considered one of the state's prime cash crops. About 1,700 acres are devoted to and production involves approximately 4,000 farms. The tobacco crop carries a value of about $5 million annually. The state also has a cigar manufacturer and a chewing tobacco factory in Wheeling. Gus Douglass, Agriculture Commissioner, and William Gillespie, Assistant Commissioner, are actively engaged in the promotion of tobacco farming in the state. They are responsible for several experimental projects in the state and have contributed political support at both the state and federal level in combating anti-tobacco legislation. The agriculture department has engaged a tobacco specialist to assist the state's growers. Business The tobacco industry has been able to,build a strong force in West Virginia through The Tobacco Institute and various tobacco-oriented groups. In the forefront are the West Virginia Wholesalers Association, John Hodges, Executive Director; the West Virginia Retailers Association with Paul McKown as president: and the West Virginia .Tobacco Growers Association represented by Mr. and Mrs. Virgil Edwards. Virgil is one of the state's most progressive growers. ( (

C West Virginia, page 3 11 Other helpful business associations: the WestVirginia Chamber of Commerce; West Virginia Restaurant Association; West Virginia Retail Grocers Association; the West Virginia Grange, and the West Virginia Hotel and Motel Association. There have been occasions when Institute representatives have been able to recruit assistance from these groups in legislative battles. Labor The West Virginia AFL/CIO has testified in opposition to anti-tobacco legislation and has been an effective ally in opposing the regulation of smoking. Institute Resources The decision of The Institute to curtail the West Virginia Tobacco Council program had some impact on the total program in 1986, particularly among'the growers. The Council's "News Letter" was the primary source of information to many growers as well as others interested in the preservation of the industry. The void was partially filled by some legislative bulletins but the complaint was not enough "pre-warning" as to what was happening nationwide to provide a guideline. The honoraria program initiated in 1985 generated some "severe criticism" in the Charleston press, but the assistance generated certainly far outstripped the drawback. ANTI-TOBACCO FORCES The heart association also has been an anti-tobacco legislation. The cancer active as the others. During the 1986 active supporter of society has not been as session hospital I O representatives became involved, as well as some other loosely organized groups and several individuals. ~ 0 The Charleston,press has become even more anti-tobacco, if possible; in editorial positions and news stories. The West Virginia Lung Association still maintains its position as the most forceful anti-tobacco group. It has been persistent in efforts to secure passage of a clean indoor air act. It engaged a full-time lobbyist for the 1986 session. TOBACCO INDUSTRY Brief History of Successes and Problems The 1986 legislative session witnessed a decrease in the number of restrictive smoking bills introduced. There were only two bills - one in the Senate and one in the House of Delegates.

West Virginia, page 4 Even though only two smoking bills were introduced, the industry faced new problems - the emergence of smokeless tobacco legislation. Five bills - three in the House and two in the Senate - were offered. The Senate passed a smokeless tobacco bill in 1986, but we prevailed in the House. A review of restrictive smoking legislation in West Virginia, shows that the first bill was proposed in 1975. From 1975 through 1986 thirty-eight bills were offered, but none passed. In 1979 and again in 1980 five different bills were presented. Major Issues - State and Local One of our main concerns is that the anti-smoking forces will change their strategy and push for segmented legislation, covering only certain areas such as hospitals or restaurants instead of all-encompassing clean indoor air legislation. This strategy will dilute our allies and make it tougher for us to kill the legislation. Outlook It is certain that anti-tobacco legislation will be an issue in 1987. All indications point to restrictive smoking bills as well as smokeless tobacco legislation. Presently, it appears there is more attention directed at smokeless tobacco than at restrictions on smoking, but this status is subject to change. It is a certainty that the tobacco industry will be facing increased pressures in 1987. Blue Cross/Blue Shield has been running full page ads in the newspapers attacking smokeless tobacco in particular. The West Virginia State Medical Association intends to become increasingly involved in disease prevention efforts. The State Superintendent was directed to provide recommendations to the State Board of Education as to school policy. Furthermore, it is anticipated that the Hospital Association will be more organized and more forceful. It is doubtful, at this time, that there will be any effort by the administration to increase the cigarette tax. .There is no indication that taxes will be increased even though revenue was $27 million short of estimates through October. The administration is hoping that some of'the shortfall will.be overcome through the tax amnesty program now in effect. Too, the prediction is that the economy will improve during the remainder of the present fiscal year. Tort reform, which was one of the most controversial issues of the 1986 legislative sessions, may be a key issue again in 1987. C ( e

C West Virginia, page 5 The tax reappraisal program will draw considerable attention in 1987 since the question of implementation is being carefully' scrutinized by various segments of business. There are no discussions relative to possible legislation in the areas of advertising and sampling. It will require dedication on the part of all to retain the status quo of the tobacco industry in West Virginia in 1987. High on the priority list are additions to the tobacco industry's coalition. December 1986 C

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WISCONSIN ( PREFACE From the state that produced the progressive political ideology of "fighting Bob LaFollette," and quite ironically, the state that also produced the "Red Scare" manipulator, Senator Joseph McCarthy, Wisconsin can distinguish itself as a type of political metronome. remarkably short period of time. Wisconsin is a melting pot of German and Scandinavian immigrants. They formed the basis of Wisconsin's progressive tradition. Since statehood in 1848, this same ethnic constituency strongly opposed slavery, insisted upon free quality education for its children, elected socialist mayors in the City of Milwaukee, and, although as the nation's leading producer of dairy products, progressed from an agrarian to an industrial society in a Wisconsin has a population of 4.7 million and a market share of 1.8 per cent. Wisconsin's industry combines agricultural, heavy industry and tourism which would, on paper, indicate a very healthy economy. In reality, many sectors of the industrial economy are migrating to the sunbelt for better tax treatment. Wisconsin's constitution insists on a balanced state budget and that budget is carried successfully due to a very high state income tax base. STATE OVERVIEW Economic Condition and Outlook Wisconsin's economic health is deceptive. A state which prided itself in a strong work ethic and hospitable people, is losing its economic base for several reasons: (1) since 1972, increased energy costs have encouraged industrial leaders to look for more temperate climates when planning new construction; (2) a tax policy that tends to dissuade upper echelon executives from locating their established businesses in the state and (3) the inability of Wisconsin to exit from the old industrial age, epitomized by rusting factories and empty breweries, causing Wisconsin, the "jewel of the snow belt" to be renamed "the cog of the rust belt." C

Wisconsin, page 2 The outlook remains vague. The outgoing Democratic administration of Governor Earl and the Democratic legislature became very testy and defensive concerning Wisconsin's economic climate. The Lieutenant Governor, James Flynn, was named as a special emissary to attract business to the state. This particular function has failed miserably due, not only to the perceived ineptitude of the Lieutenant Governor, but more dramatically to the impression that Wisconsin is a bad place to do business. Several options have been suggested; however, none have received widespread approval from the industrial and legislative communities. The normally progressive Wisconsin attitude refuses to come to terms with its mortgage on the past. Political Situation: Current and Outlook Incumbent Democratic Governor Anthony Earl was defeated by Republican Assembly Minority Leader Tommy Thompson. This situation is an improvement for the tobacco industry in the state of Wisconsin. Additionally, Governor elect Thompson is a close friend of TI legislative counsel James W. Wimmer, Jr. Regarding state legislative races, Democrats widened their lead in the State Assembly by a margin o•f 54-45, although two recounts involving victorious Democrats are still pending. In the State Senate, Democrats widened their lead by picking up an extra seat and temporarily holding a 20-11 majority. However, two seats presently held by Republicans will become vacant when State Senator Scott McCallum assumes the office of Lt. Governor and State Senator Don Hanaway assumes the office of Attorney General. Those seats will be the subject of a call for a special election sometime this winter or spring. Regarding races for the U. S. Senate and House of Representatives, incumbent Senator Robert Kasten defeated Democratic challenger Ed Garvey by a margin of 52-48 percent. All other members of Congress in the nine Wisconsin congressional districts were reelected. With regard to the legislature's 1987 session, it is still too early to tell how much of an impact the election of Tommy Thompson will have on tobacco issues. It is important to note however, that the previously introduced product liability bill, a cigarette tax increase and an expansion of the present Clean Indoor Air Act will all receive legislative attention during the 1987 session. C ( e

Wisconsin, page 3 ( Significant State Problems Wisconsin faces some troubling problems during the second half of the decade: A perceived anti-industry environment, retarding the influx of business to the state. A perceived anti-industry environment which encourages existing businesses to move elsewhere. The expensive and overdue repair of the state's transportation system, i.e., roads, bridges and harbors. These problems could have an effect on Wisconsin's ability to lure new business. Antiquated and overburdened sewer systems in metropolitan areas such as Milwaukee pose a statewide impact with regard to determining a funding source. The increasing problems of hazardous waste and the costs involved with rectification of dump sites. RESOURCES: STRENGTHS AND WEARNESSES Tobacco Segments The presence of the tobacco industry in Wisconsin is demonstrated on several levels, the first being growers. The Northern Wisconsin Cooperative Tobacco Pool and the Wisconsin Cooperative Tobacco Growers Association represent the tobacco farm segment in Wisconsin. The vast majority of this tobacco is used for smokeless products with the remainder being used for cigar wrapper. Twenty million pounds of Wisconsin tobacco are produced yearly, with the average acreage being five acres. Both groups have been extremely helpful with legislative agendas. However, it is well known that at times the priorities of the manufacturers and that of the growers may diverge. At any rate, the growers provide an excellent broad-based farm coalition. Another important tobacco segment in Wisconsin is the Wisconsin Association of Tobacco and Candy Distributors. This wholesaler group provides a statewide grassroots legislative network and a very impressive State Capitol legislative presence. This group has reorganized and has reemphasized its commitment to The Tobacco Institute in its legislative program and issues commitment.

Wisconsin, page 4 Business The Wisconsin business community and the tobacco industry are becoming more familiar with each other through acquisitions. Most notable of those business connections are Philip Morris' acquisition of Miller Brewing and its more recent acquisition of General Foods. Any "investment" made by a member company in the state should be used to the fullest advantage in our general legislative mission. Any time a member company invests in a state, that investment is noted by the legislature. Conversely, many legislators see this diversification by our member companies as a move away from tobacco manufacturing. This has been an increasingly frequent comment in Wisconsin. Labor With severe problems at auto manufacturing plants such as American Motors in Kenosha and the uncertainties faced by workers in heavy industry plants in Milwaukee, labor in Wisconsin is in a state of flux. It is safe to say that those unions traditionally allied on most tobacco issues are the unions representing workers in the most beleaguered industries. In short, they have far more serious problems with their own contracts and jobs and are less and less willing to "stick their neck out" for industry issues. One of the strongest unions, the State Employees Union, has a tendency to maintain an aloof posture when approached on tobacco industry issues. *It is interesting to note that a state employee, Mr. Richard Rossie, was slated to lose his job due to his desire to smoke his pipe at his desk in the face of rather overzealous demands by his supervisors. Mr. Rossie requested help from our industry, and, a Circuit Court decision protecting his right to smoke without fear of dismissal, is now in the State Supreme Court. Institute Resources The most valuable resource provided by The Tobacco Institute in Wisconsin has been the securing of the best possible lobbyists to represent our industry in the legislature and the continuing support of TI to the wholesaler association. ANTI-TOBACCO FORCES The most prevalent of the anti-industry forces, and the most visibly active, is the Wisconsin chapter of the American Lung Association. The Lung Association retains legislative counsel and is active on many anti-industry legislative measures, including product liability and tax increases. e

Wisconsin, page 5 c C C Other informed anti-tobacco forces have consistently attempted to regulate personal habits in the private and public workplace. Officious state employee supervisors, as well as bored middle level, underworked private sector managers, have "taken to the streets" in an attempt to regulate smoking. TOBACCO INDUSTRY Successes and Problems - History With the aggressive activity of neighboring state Minnesota, and the similarities in the two populations, there has been a significant transmigration of anti-industry legislation. The most glaring of those issues has been Wisconsin's Clean Indoor Air Act. The new law was first introduced in a manner of severity consistent with the language found in the Minnesota law. After three legislative sessions, this measure was introduced, debated and finally passed, barely recognizable from its original form. The law is nothing more than "a sign and courtesy law" with no real enforcement mechanism and no penalty to the smoker. The successes of the industry in Wisconsin have been numerous. However, these defeated sampling ordinances, court victories on behalf of smokers and defeats of tax measures all point to the fact that Wisconsin, with its intensely active legislature, will continue to test our abilities to contain the increasing stream of anti-industry measures. Major Issues - State and Local The following issues continue to demand attention: Product Liability. The biggest and potentially the most dangerous crisis the industry faces. In 1986, SB 320, legislation to place strict liability on the tobacco industry, was introduced but was stalled in committee. It will most assuredly be reintroduced in the 1987 session. Tax Increase. Always the scapegoat for "revenue enhancement." The major concern at this point would be the earmarking of the tobacco tax for a specific segregated fund. Restrictions. Now that the legislature has seen the results of its work in the present "Clean Indoor Air Act," there are increasing calls for remedial legislation to clean up the problems embodied in the Act. Sampling Bans. Due to the defeat of local sampling ban proposals in Milwaukee, several Milwaukee legislators have indicated their desire to promote a statewide sampling ban.

Wisconsin, page 6 Advertising Restrictions. A favorite target for Lung Association operatives due to the strong sympathies of Senator Fred Risser and Representative Jeff Neubauer. Both legislators have 100-percent pro-lung association voting records and represent constituencies with vehement anti-smoking sentiment. Hiring Discrimination. As mentioned previously, groups of office supervisors have taken it upon themselves to enforce smoking restrictions under pain of dismissal. This "smoke czar" approach is spreading like a Wisconsin flu in January. OTP Tax. Already too high, but easy target. Ventilation Standards. Legislation is in the drafting stage. However, this type of anti-tobacco effort may be attempted in Administrative Rules promulgation processes. Outlook Generally, the tobacco industry has fared well in the state of Wisconsin. Taking into account a 358-day legislative session, active anti-industry efforts and an administration committed to a smoke-free society by the year 2000, the legislative task in Wisconsin is critical to the industry nationwide. A review of those issues previously outlined, would give top priority to product liability, smoking restrictions, taxation and advertising restrictions. Of those issues, it is the opinion of legislative counsel that with hard work and a unified coalition effort between wholesalers, growers and other business groups, the industry may be able to ward off any major legislative problems during 1987. The variables that could ultimately bode ill for the industry: (1) inordinately low tax receipts prompting calls for tax increases; (2) a major defeat regarding a product liability suit would most certainly enhance the momentum of tobacco product liability bills; and (3) a Supreme Court ruling on the constitutionality of dismissing workers for smoking at their stations could invite remedial legislation in the area of smoking restrictions. As in any legislative effort, those variables must be weighed and controlled. It is our goal to do just that. December 1986 C c

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( WYOMING Despite its large size, nearly 100,000 square miles, Wyoming's population of only 511,000 is the nation's smallest. Wyoming's share of the national cigarette market is 0.2 percent. Its eastern portion is characterized by extensive plains, herds of antelope and huge ranches. Its west is dominated by the Rocky Mountains, five national forests, and in its northwest corner, Yellowstone National Park. Wyoming is rural, conservative, and Republican. Wyoming's U.S. Senators and its single "Congressman-at-Large" are all Republicans. The G.O.P. has strong majorities in both the state Senate (19 to 11) and the state House (44 to 20). This political makeup reflects the nature of Wyoming's people: conservative, suspicious of intrusive government regulation, yet having a sense of environmental responsibility. STATE OVERVIEW Economic Condition and Outlook Wyoming has been slower than many other states to recover from the recession of the early eighties. It has a considerable unemployment problem directly related to the petroleum industry's downturn. Consistent with this, the state's population has dwindled by 20,000 over the last two years. Wyoming's farmers and ranchers suffer the same problems as their counterparts in other states with major agricultural industries. Low prices on their products, coupled with a high cost of doing business, result in a serious situation. But even with these economic problems, it should not be said that Wyoming's outlook is dismal. With its enormous natural resources and talented political leadership, Wyoming will probably just "ride out" tough times and prosper again in the near future. Political Situation For the most part, the results of the 1986 elections in Wyoming were predictable. The state legislature remains firmly in Republican hands; the popular and talented Congressman Dick Cheney was re-elected by a large margin; and the U.S. Senate delegation did not change, as neither Senator's term of offic,e was up. Newly-elected Governor Mike Sullivan appears almost as a token Democrat in Wyoming state government. Sullivan will serve a four-year term, but will probably not have much impact, as Wyoming is a "weak governor" state.

Wyoming, page 2 Significant State Problems Despite the state's economic woes, the Wyoming state budget is in reasonably good condition. This fact is owed to the good judgement of state officials who, during good economic times, placed many millions of dollars in trust funds. Inasmuch as these funds provide the state with a good source of revenue from which to draw, legislators are_not expected to approve any major tax increases. Even if times grow leaner, cutting back some state programs would probably be viewed as preferable to tax increases. A bill to increase cigarette taxes in 1987 may be seen as the 8 cents per pack rate in Wyoming is far lower than neighboring states' taxes. Cautious optimism will most likely be the prevailing attitude in the 1987 Wyoming legislature. Trust funds aside, the state loses $15 million each time the price of crude oil falls by $1.00. If continued over a long period of time, this trend in the oil industry could be disastrous for Wyoming. RESOURCES: *STRENGTHS AND WEAKNESSES Tobacco Segments The Wyoming Candy, Tobacco and Coin Vendors Association has been a dependable ally of The Tobacco Institute for many years. As should be expected, this group has a very small membership and, as a result, is somewhat limited in what it can do in the way of grassroots political action. But, "man-for-man" they are as valuable to TI as larger organizations in other states. TI member company personnel in Wyoming are also in short supply, but are closely.attuned to the needs of the tobacco industry and serve as excellent TAN Activists. Member company personnel are especially helpful as components of TI's awareness system in Wyoming. Business Business-related organizations helpful to The Tobacco Institute include the Wyoming Retail Association and the Colorado/Wyoming Restaurant Association. Both of these groups have demonstrated a particular interest in smoking restriction legislation and a willingness to work with TI in defeating such proposals. Labor and Fire Groups Neither labor unions nor firefighter organizations are very active politically in Wyoming. The Institute has not had occasion to work in Wyoming with groups in these two categories. C

f ANTI-TOBACCO FORCES Wyoming, page 3 Affiliates of the American Cancer Society and American Lung Association are the most active anti-smoking groups in Wyoming, though neither has organized to the point of being an effective lobby in the state capitol. There is a GASP group based in Cheyenne, but it is unorganized and ineffective. The Colorado GASP group made its presence known in Wyoming in 1985, joining with the Cancer Society and Lung Association in Cheyenne to push for a restrictive smoking ordinance in that city. The ordinance was amended to apply to city-owned facil"ities only. A local anti-smoking group in Laramie successfully pushed through a smoking restriction ordinance in late 1986, but the measure was very weak. Nevertheless, this minor success will probably encourage similar efforts in other Wyoming cities. TOBACCO INDUSTRY Brief History of Successes and Problems The tobacco industry has enjoyed good success-in preventing the escalation of tobacco taxes in Wyoming. The state's cigarette tax was increased from 4 to 8 cents per pack in 1967, and has remained at that rate for eighteen years. Wyoming's cigarette tax is lower than any neighboring state and lower than any other state west of the Mississippi River. Smoking restriction legislation surfaced in Wyoming during the 1985 and 1986 sessions. Bills to restrict smoking in public buildings and health care facilities were introduced. Both failed. f The recently passed smoking ordinance in Laramie is the only workplace law in the state. Major Issues: State and Local The single issue in Wyoming that could affect the tobacco industry in 1987 is the state's fiscal condition. Should Wyoming's financial position worsen considerably, an increase in the state's cigarette tax might be seriously considered. Outlook In 1987 it is very likely that a bill will be introduced to increase the Wyoming cigarette tax. If for no other reason, a tax increase will be proposed because the state could do so and still be "competitive" with all neighboring states. Defeating such a measure may present a significant challenge.

Wyoming, page 4 Smoking restriction legislation also will almost certainly be introduced-during the 1987.Wyoming legislative session. Bills of this sort have enjoyed little support in the past; and the 1987 version will probably not progress far. A more serious threat in 1987 will be local smoking restriction legislation. Even with the limited suc-cess anti-smokers-~recently achieved in Laramie, they will doubtlessly_be e`ncour,aged to begin pushing for similar laws in 'other,<-Wyoming cities. ..: Casper and Cheyenne are likely _targets. ~ F: ., . December 1986 A ' I `~ '1

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