Pact Would Give Hospitals Much of Tobacco Tax Hike

Senate and Assembly negotiators reached general agreement Monday on a complex plan to give county hospitals the largest share of the roughly $600 million a year raised from the voter-approved tobacco tax increase.

The six members of a Senate-Assembly conference committee did not take a formal vote on the plan but indicated they were in basic agreement on most elements of the proposal. Gov. George Deukmejian must still sign off on the deal.

Should the basic agreement hold up, it would represent a financial bonanza for Los Angeles County and other financially strapped counties that have been hard-pressed to deal with the closing of hospital emergency rooms and for growing numbers of Californians who cannot afford to pay for their own health care.

At this point, counties are in line for more than half the money that is earmarked for health services under the 1988 ballot measure, Proposition 99, which increased cigarette taxes by 25 cents a pack and required comparable hikes in other tobacco taxes.

Between $323 million and $338 million would be set aside to defray county hospitals’ costs in providing health care for the working poor--those with an income too high for welfare but too low to buy health insurance.

“We’re delighted. We think the Legislature has been listening to us and is in the mood to help,” said Karen M. Coker, a lobbyist for the County Supervisors Assn. of California.

Issues Undecided

Despite the consensus that is forming, a number of important issues remain to be decided. Assemblyman Phillip Isenberg (D-Sacramento), who is carrying the legislation to parcel out the tobacco tax revenue, said after a morning session that “we have decided generally how to spend 90% of the dollars, but we have a lot of remaining tough issues.”

Although counties are in line to receive the money, lawmakers still must decide what kind of formula will be used to distribute the funds and how counties will deal with declining Proposition 99 funds in future years. Since the beginning of the year, tobacco tax revenues have declined 10%, a drop attributed to the higher cost of cigarettes because of the tax increase. Counties are concerned about legal problems that may arise in the future if they are forced to cut their budgets because of declining tobacco tax revenues.

Another open issue is how much money--if any--will be put into an anti-smoking media advertising campaign.

Lawmakers say they hope to reach a final agreement in time to enact the legislation before the Legislature adjourns for the year Sept. 15.

Actually, conference committee members are making decisions on about $900 million--$294 million from the last six months of the 1988-89 fiscal year, which ended June 30, and $603 million expected during the current fiscal year.

Proposition 99 mandated that the money be used to subsidize the costs of medical treatment for those unable to pay for their own treatment, pump dollars into research programs, fund an anti-smoking campaign and finance natural resource programs.

The measure required that 20% of all money raised through Proposition 99 go to health education programs, 35% to hospital programs, 10% to doctors, 5% to research and 5% to natural resources, with the remaining 25% to be free to be divided up any way the Legislature chooses.

Although the initiative spelled out in general terms how the money was to be divided, it was vague on a number of key points. For example, it did not spell out whether public or private hospitals were to get the money and did not make clear which government entity should be responsible for administering the funds.

The Isenberg bill is considered the most important of numerous measures introduced to implement various elements of Proposition 99. Other bills are more narrowly focused, dealing with issues such as setting up anti-smoking education and research programs and parceling out the money for parks and natural resource projects.