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S.F. Officials Try to Secure Fair Share Of Tobacco Deal
Marc Sandalow, Chronicle Washington Bureau |
Thursday, May 21, 1998
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San Francisco officials are worried that the city could lose tens of millions of dollars under the tobacco bill winding its way through Congress and have dispatched its top attorneys to Washington to push for changes.
City Attorney Louise Renne and a deputy are furiously lobbying for an amendment that would allow local governments to either pursue their own lawsuits against the tobacco companies or share in the estimated $500 billion that would be collected under the comprehensive legislation.
As currently drafted, the main tobacco legislation under consideration -- written by Senator John McCain, R-Ariz., and supported by the White House -- would exempt the tobacco industry from any lawsuits filed by local governments. Although it would impose far harsher sanctions than the settlement negotiated with the tobacco industry last year, money would be disbursed to the states, which would be under no obligation to reimburse cities and counties.
``The (current bill) would wipe out our lawsuits, just wipe them out, without any consideration of any compensation for any of our concerns,'' said Renne, in between visits to lawmakers.
FIRST TO SUE
``We were very, very early in the forefront of this,'' she said. ``If there is going to be a settlement, there should be compensation for those cities.''
In 1996, San Francisco became the first city to sue the tobacco companies over unlawful and unfair business practices. The lawsuit on behalf of San Francisco and other local California jurisdictions was a factor in R.J. Reynolds' decision to abandon its Joe Camel advertising campaign.
The city currently has cases pending in both state and federal court. Besides San Francisco, San Jose and Los Angeles, other local governments with lawsuits pending include New York City, Birmingham, Ala., Cook County (Illinois), Erie County (New York) and 15 California counties.
In San Francisco alone, city officials had hoped the suits might yield tens of millions of dollars to help care for people with smoking- related illnesses and to pay for anti-smoking campaigns. Statewide, Renne said that caring for patients with smoking-related illnesses in public hospitals costs between $200 million and $400 million each year.
California Senator Dianne Feinstein decried the treatment of local governments in the current bill as ``simply unfair,'' in a speech yesterday on the Senate floor, and said she will introduce an amendment that would require states to share the money with cities that have filed lawsuits. Under the amendment, states would not receive their portion of the settlement until they negotiate a plan to share the payments with local governments.
CHALLENGE IN COURT
Renne raised the prospect of challenging the legislation in court if Congress balks at the amendment.
``We take the position that if they wipe out our lawsuits, it's unconstitutional, and frankly I would sue to set aside the settlement,'' Renne said.
The local governments' concern is one of many competing interests as the Senate slowly works its way through the complex bill.
Yesterday, the Senate rejected a proposed $1.50-per-pack tax increase, proposed by Senator Edward Kennedy, D-Mass, to discourage teenagers from smoking. The McCain legislation would raise taxes by about $1.10 per pack.
``This is about saving lives,'' Kennedy said. ``This is, I think, the most important public health amendment we have.''
Opponents argued that the tax amounted to a levy on the poor, who tend to smoke in greater proportions.
``We're piling on the poor people of America with a tax burden they should not be required to carry,'' said Senator John Ashcroft, R- Mo.
California's senators, both Democrats, split on the vote. Barbara Boxer voted to support Kennedy's amendment, while Feinstein voted against it.
FEAR OF BLACK MARKET
Feinstein said she is uncomfortable even with the more modest tax contained in the McCain legislation and said she may join an effort by Senator Orrin Hatch, R-Utah, to lower the tax and limit the tobacco companies' liability.
In an interview, Feinstein said she is concerned that higher taxes will encourage a black market that would bring scores of bootleg cigarettes into border states like California. Hatch's measure -- which is opposed by many health advocates -- would put the price of cigarettes at about $3.58 a pack in five years, compared to about $4.61 under the McCain bill, under an analysis conducted by Salomon Smith Barney.
``The question becomes, at what point do you have a very consequential black market?'' she said, warning that high prices would encourage smugglers from Mexico and China and perhaps make it easier for children to buy cigarettes.
Feinstein also said she supported a complete ban on cigarette advertising and dismissed charges that her stance to limit the tobacco companies' liability meant she was weakening the legislation.
``Right now, the psychopathology of the (Senate) is to stick it to big tobacco,'' Feinstein said. ``I'd like to stick it to big tobacco as much as the next guy.''
In her speech before the Senate, Feinstein also complained that
the formula for distributing revenue under the bill would shortchange
California. She said she plans to introduce an amendment to the
McCain bill that would divide the funds on a per-capita basis, which
would boost California's share by a third.
| POLITICS '98 |
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Calif. Sec'y of State
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Governor's Debate Lead story: Flaws in initiative process could take initiative to fix. S.F. officials try to secure fair share of tobacco deal. Al Checchi's amazing arrogance. Feinstein endorses Harman in gov's race. Fong senate campaign gasps for breath as coffers run dry. Supervisor Newsom's push for Muni civility. Rent control ballot initiative called deceptive. Harman says she'd modify Prop. 13 Ireland's undecideds critical to peace plan success. Politicos more savvy in courting Latinos. Taxpayers charged for Davis' political trips.  Ireland Special Catherine Heenan reports from N. Ireland on tomorrow's peace plan vote. Part I | Part II | Part III |
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