Hooked on sin Despite the social cost, Rhode Island’s budget relies heavily on smoking and gambling revenue –and there’s no cure in sight BY BRIAN C. JONES

IN THE EARLY days of the smoking wars, Rhode Island legislators would light up – literally – when they spotted Margaret Kane.

They’d fire up their cigars, pipes, and cigarettes, creating a gauntlet of smoke for Kane, who represented the American Lung Association of Rhode Island and was one of the first to raise alarms about smoking.

Thirty years later, no senator or representative would dream of blowing smoke at the executive direct or of the Lung Association, both out of respect for Kane and for her anti-smoking cause.

Anyway, it’s against the law, now, to smoke in the State House and many other public places. The state runs a sophisticated anti-smoking program. And what Kane calls a profound "social change" has made smoking something of a cultural taboo for many Rhode Islanders.

But Kane and her fellow crusaders would be the first to concede that the glass is half-full.

Just in this past General Assembly session, anti-smoking efforts stalled on at least two fronts. Neither the legislature nor Governor Donald L. Carcieri made any moves to strengthen the state Department of Health’s woefully under-funded tobacco control program, despite raising more than $22 million from higher cigarette taxes. The cigarette levy was raised by 39 cents per-pack, which could boost annual revenues to an estimated $117 million, according to the state Budget Office. But the state’s appropriation for tobacco control stayed at $2.7 million.

State leaders did the same thing with another addiction-related activity: gambling.

Carcieri and the legislature approved additional video slot machines at the state’s two gambling facilities in Newport and Lincoln, while also carving out a bigger state share of gambling proceeds. The moves could bring total annual gambling revenue to $302 million. But the governor and the legislature "level-funded" programs to help problem gamblers at the paltry $192,000 they’ve received in the past two years.

Meanwhile, a bill that would have strengthened no-smoking bans was scuttled.

The Senate passed the anti-smoking bill, which would have banned workplace smoking, 25-to-7. But the House snuffed the measure, which would have had its sharpest impact on bars and restaurants. The apparent reason was a bizarre collision of the smoking and gambling issues.

One supporter of the bill, Representative Elizabeth M. Dennigan (D-East Providence), says House Speaker William J. Murphy told her he was afraid that the smoking ban would depress gambling revenues. Dennigan says Murphy was worried a smoking ban might drive away smoker-gamblers from video machines at the Lincoln dog track and Newport’s jai alai facility.

That wasn’t an idle concern, Dennigan says, explaining that Delaware saw a big drop-off in gambling revenue after a similar smoking ban, although she says gamblers later began to return in that state.

The Phoenix asked Larry Berman, spokesman for Murphy and other House leaders, for comment about the linkage between smoking and gambling. Representative Paul V. Sherlock (D-Warwick), chairman of the House Finance Committee, responded to the query by saying there simply wasn’t enough money to do everything the legislature would have liked.

"No one is more frustrated than the Legislature when we have to apportion an insufficient amount of dollars amongst a variety of so many constituencies, but we attempt to do our best to fund as many areas – such as reducing smoking – as possible," Sherlock says in an e-mail. "If we had additional dollars, I’m certain we would invest more funding to target the incidences of smoking amongst our youth. Targeting that age group would be the biggest priority for me."

Carcieri’s spokesman, Jeff Neal, noted that when cigarette taxes increase, some smokers get priced out of the market and stop buying and smoking cigarettes.

Anti-smoking advocates say Neal’s point is valid – especially with children and teenagers. A 10 percent hike in the price of a pack of cigarettes will reduce consumption three to five percent, according to the Campaign for Tobacco-Free Kids, a national advocacy organization.

Neal was asked if Rhode Island’s growing reliance on money from gambling and smoking compromised the state’s role as guardian of the public’s health. "I don’t believe that’s the case," he says in a telephone interview. "The state has an underlying interest in the well-being of its citizens and that goes beyond budget considerations."

The governor’s spokesman was also asked whether ills caused by smoking should be addressed first with the proceeds of a sharply hiked cigarette tax before any of the money is used for other purposes. "It is very easy to take any particular priority and look at it in a vacuum and say: ‘Shouldn’t we be doing more?’ " Neal says. "The reality is any time you pick out any one item, you do not take into account other priorities that may be just as important."

WHEN IT COMES to smoking, there’s evidence that government countermeasures actually work.

For example, California has one of the longest-running programs, and according to the Campaign for Tobacco-Free Kids, these are some of the results:

• During a 12-year period, the percentage of adults smokers dropped from 23 percent to 17 percent.

• Over six years, smoking by children ages 12 to 17 dropped 35 percent.

• Health complications from smoking by pregnant mothers dropped relatively quickly, saving nearly $20 million in medical costs in two years.

• Even though other health improvements take time to see, California officials believe lung cancer rates have begun to drop since 1988, saving lives and dollars.

Federal officials, including those in the surgeon general’s office, believe that smoking rates can be cut in half when states fully fund their programs. Thus, if Rhode Island’s program was at full speed, the rate of adults who smoke might drop from about 24 percent to around 12 percent.

What’s more, not only do public officials know what kinds of programs work, they also have a pretty good idea of how much they should be spending. The federal Centers for Disease Control and Prevention issues summaries for states, estimating the money they need for effective programs.

Rhode Island should be spending nearly $10 million to $22 million, according to the CDC. Instead, tobacco control – from federal, state, and other sources – gets about $4.7 million, half the recommended minimum.

Based on these kinds of numbers, Tobacco-Free Kids has ranked Rhode Island 30th among 50 states and the District of Columbia in spending needed to meet the government’s minimum guidelines. (Maine tops the list with the most generous program; Washington, DC, and three states, including Michigan, spend nothing.) So, to be an effective player in reducing smoking and its health consequences, Rhode Island needs to spend about $5 million more a year than it does now.

Betty Harvey runs the Tobacco Control Program at the state Department of Health. "There’s no one thing that works – it has to be a comprehensive program," Harvey says. And during the last 10 years, Rhode Island has developed just such a multi-pronged program.

The state sponsors anti-smoking commercials, provides programs for smokers who want to quit, organizes community wide anti-smoking efforts, seeks to curb illegal sales to underage smokers, and pays for some in-school programs.

Multiple approaches also are needed within specific programs, Harvey says. Experience shows that to quit, smokers need help – only about four percent are able to do it on their own. But the success rate jumps to 28 percent with treatment. And what works best is a combination of counseling, at least five hours worth, plus nicotine replacement with gum or skin patches. Success rates go up if a doctor has urged the smoker to quit.

In schools, a small number of students will avoid cigarettes once they are taught about scientific evidence of smoking’s effects. It also helps if schools enforce no-smoking policies. But policing schools is hard because much illicit smoking takes places in rest rooms – locations that teachers and others are reluctant to monitor. Researchers also have found that while youngsters are not susceptible to "don’t smoke" messages, they are turned off when they learn about tobacco companies’ manipulative efforts to draw in young smokers.

Developing this kind of strategy – then putting it to work – takes money, which is why CDC developed its state-by-state recommendations for a range of spending. Anti-smoking crusaders had these targets in mind in 1998, the year when a bonanza of tobacco money came available to the states.

A number of states, including Rhode Island, had sued the major tobacco companies, claiming not only that the cost of treating smoking-related illnesses was consuming millions in Medicaid funds, but that tobacco companies had committed consumer fraud and other infractions. In a national settlement of the court cases, tobacco companies agreed to pay the states annual installments worth more than $200 billion. Reformers demanded the payments be used for anti-smoking work and health programs.

One of the lawyers who fashioned the national settlement was Rhode Islander John J. McConnell Jr., who says negotiators immediately realized that state governments might not use the windfall for smoking-related programs.

But only one state – Rhode Island – actually tried to suggest how state leaders should use the money, McConnell says. The consent decree filed to settle Rhode Island’s court case suggested that the money go for health and anti-smoking initiatives.

McConnell, a major operative in state and national Democratic Party politics, credits then-attorney general Jeffrey B. Pine – a Republican – for insisting on unique language just as he was leaving office in late 1998.

According to the court order, "The funds provided to the State of Rhode Island under . . . the agreement are compensation to be held in trust, with specific expenditures to be determined by the General Assembly and Governor through the normal appropriation process. It is the intent and recommendation of the parties to the agreement that such funds be used for public health purposes only, including, but not limited to, state and local governmental entity health service programs, medical research and tobacco-related health programs."

But as rivers of tobacco money began to pour into Rhode Island at a rate of $45 million to nearly $59 million a year – then-governor Lincoln C. Almond and the General Assembly earmarked none of it for smoking-related uses, instead putting it into the state’s general fund. The Almond administration argued, in effect, that the tobacco money was being used for health spending, because in those years the state’s much-praised health insurance program for the poor, RIte Care, was growing and the tobacco money helped to support it.

Anti-smoking forces argued that the money should have been designated specifically for smoking and health issues. One of the biggest proponents was Lieutenant Governor Charles J. Fogarty. In 2000, he proposed allocating half of the settlement payments into a "state health improvement plan" that would ensure basic health coverage for all Rhode Islanders, with the rest funneled toward anti-smoking efforts.

Nothing of the sort happened. But Fogarty and sympathetic legislators got some state dollars added to tobacco control, and over three years, state anti-smoking spending increased to its current level of almost $3 million.

The tobacco control program now gets about $4.7 million a year from the following sources: $1.1 million from the Centers for Disease Control and Prevention; $2.7 million from the state; and $833,000 from the American Legacy Foundation.

A second pivotal point came last year, when the Almond administration and the General Assembly cashed in its tobacco settlement funds for the foreseeable future. The state sold $685.4 million worth of bonds, with the annual tobacco payments turned over to the bondholders. By some estimates, the state gave up $1.8 billion worth of payments over a few decades to get the immediate funds.

Some of the money went to lower costs of earlier state borrowing; the rest went to plug sudden, gaping holes in the state budget. For the anti-smoking crowd, it meant the end of any chance of using the "moral argument" of claiming tobacco settlement money for anti-smoking uses. To this day, McConnell is "distressed" by how Rhode Island used the money, and decries the "pitiful amount of money we spend" on tobacco control.

In all, in the seven years since the tobacco settlement, Rhode Island will have collected a total of $536 million in cigarette taxes, $209 million in annual settlement payments, and the $685 million in settlement bonds – a total of $1.4 billion. In the same period, Rhode Island will have spent only about $10 million in state money for anti-tobacco programs.

During those years, extrapolating from the CDC estimates of about 1704 deaths annually, nearly 12,000 Rhode Islanders will have died of smoking-linked illnesses.

WITH THE TOBACCO settlement windfall up in smoke, the anti-tobacco crusade is back where it started: a debate about how much state money to spend for tobacco control, and what new laws might be needed.

Dennigan, the state representative, says she’ll resubmit the bill that died this year. The measure would have strengthened existing laws. Current law requires employers to make "reasonable accommodations" between smokers and non-smokers in the workplace. The bill proposed banning workplace smoking "without exception."

As a practical matter, most workplaces are voluntarily smoke-free, and the biggest impact would be on restaurants and bars, where waitstaff and other workers, as well as customers, face exposure to smoke.

In lieu of increased smoking ban, Deputy Speaker Thomas Winfield (D-Smithfield), had proposed a special House commission to review of "the impact of smoking in the workplace." However, it was unclear at deadline whether the measure was approved in the closing days of the assembly session, and Winfield didn’t return a call seeking comment.

For her part, Dennigan had been willing to exclude gambling areas to get the overall smoking bill through the House, but she is not planning to do that next year. "I won’t start in that position in January," says Dennigan, who comes by her interest in anti-smoking legislation through her twin professions as an emergency room nurse and a lawyer. She believes that chances may be better next year, both because her House colleagues told her so, and because of what she describes as a growing coalition that’s determined to curb workplace smoke.

Among the supporters is Bob Burke, operator of the downtown Providence Pot au Feu and the Federal Reserve restaurants.

Burke, an asthma sufferer who banned smoking in the Pot au Feu dinning rooms as far back as 1987, scoffs at the opposition to the bill by some restaurants that belong to the Rhode Island Hospitality and Tourism Association.

"The state of Rhode Island has an eight-step process to wash a water glass. Why? So one customer doesn’t give a cold to another customer," Burke says. "And every restaurant willingly follows the process and yet that same restaurant will sit you next to somebody smoking cigarettes and is willing to give you a far more serious disease, and think nothing of it."

Burke believes more and more restaurant operators favor a ban, in part for economic reasons, including the possibility of lawsuits brought by restaurant employees claiming they’ve been adversely affected by workplace second-hand smoke. Burke says one Providence lawyer appears to be laying groundwork for such claims.

A spokesman for the hospitality association didn’t return a call seeking comment.

Meanwhile, it’s not clear whether the state will move to double its tobacco control program to bring it to the $10 million annual level recommended by the Centers for Disease Control.

Many advocates are pleased that cigarette taxes were boosted so sharply, this year, since they believe smokers are driven to quit when prices rise. Also, the anti-smoking forces are relieved that the governor and the General Assembly didn’t cut Rhode Island tobacco control program, as have many other states, which are facing far more serious budget problems. Fogarty, who thinks on principle that some cigarette tax increase should be diverted to anti-smoking, credits the legislature for not gutting tobacco control.

"I have to say that given the tough financial circumstances, the fact that anti-tobacco programs haven’t been devastated does say something positive about the General Assembly’s understanding of the problem and its commitment," Fogarty says. "It would have been easy to say: ‘Here’s a source of money.’ "

Lori Fresina, northeast regional advocacy representative for Tobacco-Free Kids, notes that Massachusetts has gutted its program, cutting it from $48 million to $2 million.

There are multiple ironies in the Bay State retreat, where the tobacco control program was once held up as one of the nation’s best. Rhode Island’s own program was boosted when Massachusetts proposed Rhode Island join with it to run anti-tobacco ads.

All of that said, Rhode Island’s program is operating at half-speed. Fogarty believes the state has made strides in putting a program together, but he sounds disappointed. "We’ve been moving in that direction," he says. "But I don’t think we’ve achieved the position or that we’ve been able to have a significant impact at this point."

Nobody interviewed for this article said that state officials are acting in bad faith, or are hoping to keep Rhode Island’s smokers puffing away just so they can keep sending millions of dollars to the treasury. To the contrary, lawyer McConnell and others argue that if money is their main motive, state leaders would be inclined to curb smoking. That’s because taxpayers stand to save millions if smoke-related illnesses go down.

Experts at the Centers for Disease Control estimate that medical costs to treat lung cancer and other diseases total $395 million in Rhode Island, with taxpayers shouldering a big part of the tab through the federal-state Medicaid health insurance program. Reducing smoking, according to this argument, has the potential to save the state far more money than it would lose in cigarette taxes, should the number of smokers drop sharply.

But those financial gains take years to achieve. In the short term, the state seems caught in a grim calculus.

A bill meant to protect restaurant customers and workers alike from second-hand smoke was apparently put off at least a year to safeguard the state’s growing pot of gambling money. The General Assembly and the governor authored major hikes in state "sin" taxes on smoking and gambling, thereby avoid increases in the income and sales taxes.

The increase in smoking revenues could be more than $22 million. But lawmakers and the governor never suggested using $5 million of that to minimally fund the tobacco control program and possibly cut in half the number of adult smokers, estimated now to number 192,119.

The increase in gambling money could be even bigger, more than $63 million. Again, none was proposed to help Rhode Island problem gamblers, who according to some estimates, number between 10,000 to 30,000.

So while legislators and other leaders are no longer blowing smoke at reformers like Margaret Kane, they are presiding over a state government that seems to have become addicted to smoking and gambling money.

And for the time being, there’s no cure in sight.

Brian C. Jones can be reached at brijudy@ids.net