Pennsylvania Senate adds five-year expiration provision to proposed US$2/pack cigarette tax; bill now heads back to House, which is on summer break and may not reconvene until Aug. 4

PHILADELPHIA , July 10, 2014 () – Philadelphia was one state Senate vote away from winning its $2-per-pack cigarette tax in the General Assembly on Tuesday.

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

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

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

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

"This allows us the opportunity to review an unprecedented tax," said Corman, whose reelection campaign has received $14,000 this year from tobacco companies.

He added the tax could lead to a reduction in the $2 billion the state takes in from tobacco revenue each year.

"As protector of the general fund, I have great concerns about what this could mean for the state," he said.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Tobacco companies spent $6 million on lobbying last year in Harrisburg and have so far spent $1.7 million in 2014, although that figure does not include convenience stores that sell tobacco products, according to data from the Department of State.

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

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

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

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

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

The House is tentatively scheduled to return on Aug. 4, ostensibly to take up the cigarette tax bill.

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

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