Controller to Fight Cigarette Tax Lawsuit

State Controller Kathleen Connell on Thursday denounced a lawsuit filed by a group of retail tobacconists who are seeking to halt the implementation of Proposition 10--the initiative approved by voters in November to raise cigarette and tobacco taxes.

The lawsuit, filed this week by a group representing sellers of cigars, pipes and related products, contends that the initiative violates the state Constitution because the commission it created to oversee spending of money generated by the new tax, the California Children and Families First Commission, is not under state control.

The suit also says there is a lack of connection between a tax on tobacco and the early childhood development program that the new tax would fund. The lawsuit asks that implementation of the tax be suspended.

“The state Constitution says that the state cannot appropriate state funds that are not under the exclusive management and control of the government,” said Edward Lozowicki, the attorney representing the tobacco sellers.

“The commission created by Prop. 10 is not under the control of the normal legislative budget process. The commissioner does not report to the governor or anyone else in the executive branch of the government.”

Moreover, he said, the tax violates the “single subject rule” of the state Constitution, which, he said, prohibits the funding of a program with a tax on an unrelated product.

But Connell, standing in front of a playground full of toddlers at a news conference at Childrens Hospital Los Angeles, defended the initiative.

“The programs these tobacco firms are seeking to de-fund are designed to educate young people on the dangers of smoking,” she said. “I’m going to fight this lawsuit with my last breath.

“We think there is a direct nexus between early childhood education programs and tobacco products,” Connell said, pointing out that the programs receiving money from the tax would include efforts aimed at stopping children from smoking.

The independence of the commission is no different from that of the Public Utilities Commission and the Fair and Exposition Commission, she said.

California tobacconists decided to go to court because of the “undue burden” of the new taxes, said Charles Janigian, president of the trade association that filed the lawsuit. The businesses fear that the increased price will drive customers to buy tobacco products from out-of-state mail order firms not subject to the tax, he said.

Proposition 10 imposed an additional 50-cent tax on every packet of cigarettes and a 135% tax increase on “‘other tobacco products” such as cigars and pipe tobacco. The tobacco industry estimates that the proposition will increase taxes by $750 million per year.