Changes Made in Tobacco Tax/Stem Cell Proposed Ballot Measure

The proposed tobacco tax initiative that could provide roughly $200 million a year to the California stem cell agency has been revised by its backers, although the changes initially appear not to affect the potential cash for the research effort.

Backers of the effort reported the changes today after the original version of the proposal dropped off the state attorney general's Web site this week, its first stop on the way to qualifying for the ballot.

In response to a query from the California Stem Cell Report, attorney Phil Kohn of the Rutan & Tucker law firm of Costa Mesa said the measure had been altered and was being resubmitted. We asked him to indicate the nature of the changes and their location in the document. He replied,

"There is a language change in Section 3(a) of the 'Purpose and intent' portion.  In addition, the following sections of the Act were modified (in minor part):  130161, subdivisions (e)(1), (e)(2) and (e)(3); 130163, subdivision (d)(2); 130164, subdivisions (c)(2) and new (c)(4); and 130165, subdivisions (b)(2) and new (b)(4)."

He also said that the Frank Barbaro of Santa Ana, the man responsible for the initiative, is a litigation lawyer and is currently deeply involved in a trial matter. He said Barbaro, who is also the former chairman of the Orange County Democratic Party, will elaborate on the initiative once he is free of his pressing professional obligations.

Here is the initial version of the ballot measure.

  Tobacco Tax Stem Cell Initiative Version 1 -- 2014

Here is the latest version of the ballot measure as provided by Kohn.

  Tobacco Tax Stem Cell Initiative Version 2  --2014

Text of Tobacco Tax Initiative to be Posted on this Web Site

The text of the proposed tobacco tax initiative that would fund the California stem cell agency has vanished from its location last week on the attorney general's Web site. We are attempting to query the attorney general's office about the matter. We will also post the full text on this Web site shortly. 

Tobacco Taxes and Stem Cells: Backers Still Not Talking, Questions Raised

Backers of a proposal that could rescue the $3 billion California stem cell agency from financial oblivion remained mum today as questions arose about the viability of the possible ballot measure.

The plan would raise roughly $700 million annually by increasing tobacco taxes, channeling about $200 million to the stem cell agency through a ballot initiative that would have to be approved California voters. The stem cell agency is scheduled to run out of cash for new awards in 2017 and is casting about for new sources of funding.

However, CIRM, as the agency is known, was largely caught by surprise last week by the release of the details of the proposal, which was filed by prominent Orange County attorney Frank Barbaro, former chairman of the county's Democratic Party.

Barbaro has not responded to email requests for more information about the backers of the plan and their financial commitment to an electoral campaign. Backers of a similar proposal that was narrowly defeated in 2012, Prop. 29, said they knew nothing about the effort.

The latest measure could go on the November ballot this year or the general election ballot in 2016 if it qualifies. The timeline for November is daunting. Responding to a query from the California Stem Cell Report, Sacramento political consultant Jeff Raimundo said in an email,

“Sounds like most people didn’t know this was coming. An Orange County attorney filing an initiative with no known backers?  Hmmm…formula for failure? 

“If stem cell agency folks didn’t know about it (and there’s no real reason to believe they did) and the cancer-fighting community had no knowledge, it’s hard to figure out how proponents are going to muster support from voters who only two years ago rejected a similar proposal from a more transparent and credible group. Prop. 29 barely failed, but it had a big push from advocacy organizations. 

“Too many questions right now to get a good handle on how effective such a campaign might be  -- who the REAL sponsors are, who would put up the money for the campaign, whether the OC attorney is a shill for someone else, whether those who back CIRM and its research role can be persuaded to back a new proposition. Many more initiative proposals are filed than are ever circulated. And many more are circulated than ever actually make the ballot in Californa. They’ve got a long way to go and not a lot of time to get there.”

The agency said last week that it has not endorsed the plan. Directors have not yet had a chance to consider it during a public meeting.

But CIRM Director Francisco Prieto, a Sacramento physician, told the California Stem Cell Report,

“I wasn’t aware of the tie-in to CIRM funding before (Friday). I don’t think they asked us first, but I’d be happy to see it pass, of course. I’m in favor of so-called 'sin taxes' – including those I pay when I support California’s wine industry. Raising the price of tobacco is one of the single most effective things that we can do to reduce smoking rates, especially among young people who are the most price sensitive. As the guy who has to sign the death certificates, I’m in favor of anything we can do to reduce smoking.”

Another CIRM director who responded to our queries, Jeff Sheehy, a communications manager at UC San Francisco, said that conceptually the proposal could make sense.

 "It's a better source of funds.  However, it does create a well-funded opposition campaign.  Still trying to  figure out if this is a good thing or not," Sheehy said.

Other board members as well said they had no advance knowledge of details of the measure.

Robert Klein, the former chairman of the agency, also responded, saying that that he was not involved in the proposal. He said he questioned the structure and funding approach but declined to elaborate.

Earlier last month we asked Klein about talk in the California stem cell community that he was involved in another bond measure effort for CIRM. Bonds are the current source of funding for the agency.

A spokeswoman for Klein replied,

“There is no campaign. We have done a single one scientific briefing on the progress of Proposition 71(the measure that created CIRM in 2004). It is strictly informational and does not constitute a campaign. We will decide in late 2015 what the next steps will be based on the scientific research at that time.”

Our take: In terms of the financial structure, Barbaro's tobacco tax proposal has at least one downside for CIRM. If the measure is successful in its goal of reducing smoking, the amount of money it raises from tobacco consumption will decrease. That, of course, would mean a dwindling amount of cash for the agency.

Launching a campaign for next fall's ballot would require a prodigious effort at this late stage even if some of the millions needed are already nailed down. The groups that backed the measure in 2012 are not likely to jump aboard immediately given their surprise at the latest proposal. They also may have other priorities as well at this point. Organizationally, work would have to begin now even though there is the possibility that not enough signatures could be gathered by the end of May to qualify for the fall ballot.

Opposition from the tobacco industry would be fierce. It raised $47 million in 2012 for its campaign compared to $12.3 million from the backers of the tobacco tax.

Stem Cell Agency Financing Proposal a Mystery to Some

A proposed ballot measure that could mean the financial survival of the $3 billion California stem cell agency was little known to the agency itself until early this week and is a mystery to backers of a similar tobacco tax proposal in 2012.

Kevin McCormack, senior director for communications at the agency, said,

“Individuals at CIRM did hear about the possibility of another tobacco tax measure but did not know any of the details, including the 30 percent provision for us, until the initiative was filed on Tuesday.” 

He told the California Stem Cell Report in an email, 

“As for being in support of the plan, the board has not yet had a chance to consider this measure and therefore we do not have any position on it.”

Some of the agency's board members also indicated that they were not involved with the proposal and learned of it only today.

Jim Knox, vice president for advocacy of the American Cancer Society Cancer Action Network in Sacramento, said in a telephone interview that none of the groups that backed the unsuccessful Prop. 29 in 2012 was involved in the latest effort.

The proposed initiative was filed Monday by Santa Ana attorney Frank Barbaro, the former chairman of the Orange County Democratic Party. It would impose a $1.00-a-pack tax on cigarettes to fund brain research and related illnesses, raising roughly $700 million annually. Thirty percent would be routed directly to the stem cell agency, which will run out of money for new grants in 2017.

Barbaro has not yet responded to a request for comment. 

Knox, who was involved in the 2012 campaign, described the situation involving the latest initiative as bit of a mystery and “strange.” He said “no one has heard” about the proposal. He said the language, however, was clearly adopted from the Prop. 29 initiative. "They stole all our language," he said.

Knox said the proposal was filed very late to qualify for the November 2014 ballot. He said Barbaro will not get his proposal back from the attorney general's office until February sometime, leaving him a very short period to gather signatures by the end of May. That is the usual deadline for qualifying measures for the November ballot.

Knox said it is possible that signatures could be gathered in time but that it would be expensive. Roughly one million signatures are needed at a cost that could run as high as $5 or so.

Knox said the Barbaro initiative could be held until the November 2016 general election.

Tobacco Tax Looms as Financial Rescue for California Stem Cell Agency

California's stem cell agency, which is facing near financial death in 2017, could be rescued by a proposed ballot initiative that could channel roughly $200 million a year to the research effort.

Frank Barbaro
OC Register photo

The measure was filed this week with state officials by attorney Frank Barbaro of Santa Ana, a major figure in Orange County Democratic politics. It appeared to be modeled after a 2012 ballot initiative to raise tobacco taxes to fund cancer research that was very narrowly defeated.

The latest proposal would increase taxes on cigarettes by about $1 a pack and raise roughly $700 million a year, based on estimates for the 2012 initiative, Prop. 29. Barbaro's proposal would set aside 30 percent of that revenue to flow directly to the stem cell agency for research into a wide range of brain disorders and “dysfunctional conditions,” including spinal cord injury, heart disease, stroke, autism, cancer and much more.

Fifty percent of the funds would go to a new California Brain Research Citizen's Oversight Committee (CBRCOC), which would consist of 11 members, of whom four would be appointed by the governor. The others would be top executives of the University of California and its campuses. The new brain research operation would be similar to that of the state stem cell agency and would be able to award grants and loans and fund buildings and equipment.

Barbaro submitted the 14-page initiative to the state attorney general's office on Monday for preparation of a title and summary. The immediate hurdle for the measure is to collect roughly 1 million signatures to qualify it for the ballot, presumably November of this year. In 2012, hiring persons to collect signatures cost anywhere from $1 for each signature to as much as $5 to $6.

The California Stem Cell Report has queried Barbaro via email for additional comment on the measure, its backers and sources of funding. We will carry his comments when they are received.

The $3 billion California stem cell agency, which subsists on money borrowed by the state, is slated to run out of cash in 2017 for new awards. It has been considering some sort of public-private effort to generate additional funding.

The 2012 tobacco tax initiative was rejected by voters by an exceedingly slim margin, 50.3 percent to 49.7 percent, a difference of less than 30,000 votes. Political gamblers are likely to bet that the latest measure would win approval next fall, although the tobacco industry is likely to mount a tough fight.