VFHF also distributed informational sheets arguing the case for a tax increase to members of the legislature.Additionally, there was some theorizing in the press, especially in the Virginian-Pilot , that Gov. Mark Warner had entered into a quid pro quo with Philip Morris USA on the issue of increasing the cigarette tax. To increase cigarette taxes, Warner would have to deal with the tobacco industry and especially Philip Morris. Philip Morris had been a large contributor to the governor’s 2002 election campaign, providing $127,600; other tobacco companies and interests provided an additional $60,300.In addition, the large tobacco companies, who were participating in the Master Settlement Agreement that settled state litigation against the tobacco industry and were required to make regular payments to the state, were forced to compete with smaller, independent tobacco companies not party to the MSA.This angered the tobacco industry because under Virginia law, these smaller companies were also required to make payments, but they were immediately refunded.The larger tobacco companies argued that these refunds to the smaller companies represented an unfair advantage for the smaller companies, which used their refunds to undercut the larger companies’ retail prices. Gov. Warner was responsive to the concerns of the larger companies, particularly Philip Morris,industrial racking system and agreed to support legislation that sought to end the refunds to the smaller companies.Some legislators also hinted that the deal paved the way for the tax increase to sail through.
Sen. Stephen Martin stated in 2004 that Philip Morris’ decision to drop their opposition “made [the bill] an even more inviting target” for passage, and that “You’d have heard more noise and resistance if that had not been the case.”Philip Morris spokesperson Jamie Drogan expressed “satisfaction” with the increase.Philip Morris’ acquiescence in supporting the tax increase proposal paved the way for the tax increase to pass a week later.Anthony Troy, who served in 2007 a lobbyist for S&M Brands accused the governor of pandering to large tobacco manufacturers’ interests by requiring small tobacco companies that were not parties to the MSA to make these payments. Larger tobacco companies argued that the small manufacturers were concentrating their business in states like Virginia that refunded the escrow payments, deriving an unfair competitive advantage. Philip Morris confirmed their support of a tax increase to 30 cents by 2005 through their legislative counsel Mark Berlind in the press while the bill was being considered in the House .HB 5018 passed at the end of April, incorporating a two-stage phase in of the cigarette tax increase. The tax was raised from 2.5 cents to 20 cents in 2004 and the following year to 30 cents. The support of Warner and Philip Morris, combined with the fiscal crisis at the time, allowed it to pass the otherwise hostile House by a vote of 52-45, and the Senate by a vote of 31- 8; it was signed by Warner on June 3, 2004. VFHF and most other advocacy groups were satisfied with the passage of HB 5018 in 2004.As Donna Reynolds described to the press after the bill’s passage, “This is a historic first step. Our goal was 75 cents, which would make Virginia about average, but we’re very happy.”A Campaign for Tobacco-Free Kids representative, also speaking to the press after the bill’s passage, quantified the impact of the tax increase as annually preventing 24,000 children from smoking, causing 21,000 adults to quit and saving about 12,000 Virginians from tobacco-related deaths.
They also calculated $310 million in revenue generated for the state through the next two year budget period.In addition to the staggered tax increase itself, the coalition counted the additional 10% excise tax on non-cigarette tobacco products and the creation of the Health Care Trust Fund, both created by HB 5018, as successes. The 2004 tax increase campaign was a successful for VFHF, and for Virginia. Increasing the price of cigarettes leads to reductions in cigarette consumption and smoking prevalence,invariably benefiting the health of the population. In addition, the campaign resulted in more MSA money being spent on healthcare issues rather than going directly into the general fund. Although this law did not directly lead to any additional tobacco control funding, increasing general healthcare funding was a welcome outcome for VFHF. Englin’s cent bill faced opposition from both the tobacco industry and their allies. These opponents included business interests such as the Virginia Petroleum, Convenience, and Grocery Association. Mike O’Connor, the president of this organization, opposed the bill because “Cigarettes are the number one product sold inside convenience stores.” Other opponents felt that the bill would threaten jobs.VFHF countered this economic argument in a series of press releases by stressing the public health component of the tax increase; namely, that it would save lives and generate significant revenue to reduce healthcare costs.Ultimately, the House Finance subcommittee killed the bill.Finally, Democratic Governor Kaine requested the introduction of a bill, HB 2389, through Del. Bob Brink which sought to raise the cigarette tax to 60 cents per pack to balance the budget, which was suffering under the recession at the end of 2008. Kaine’s plan to double the state’s tax was first revealed earlier that year in a conference with Democratic lawmakers, when he proposed using the tax to generate $150 million per year. This was intended to offset a $400 million reduction in state health care program funding that Kaine was planning on implementing.
Kaine’s plan was “tepidly” supported by VFHF,which focused on its own proposal being carried by Englin. VFHF respected Kaine’s willingness to consider a tax increase, but did not actively support his plan because the small increase would not produce significant public health outcomes.Keenan Caldwell, a VFHF member working for the American Cancer Society, said of the Kaine plan, “We’re missing an opportunity to save more lives and reduce health care costs.”Kaine’s consideration of raising cigarette excise taxes did lead to some consultation between VFHF and the governor’s office, but not to a policy that both parties could fully support.Opposition was fierce.House Speaker William Howell argued that the increase would “decimate” some of the 5,500 Virginians employed by Philip Morris. National-level politicians, like US Representative Eric Cantor , chimed in by drawing attention to a claimed $1 billion investment in the Richmond area since 2004 by Philip Morris. These arguments dovetailed with industry positions. A spokesperson for Altria warned that cigarette buyers would flock to neighboring states, removing some of the benefit of the increased tax revenue.In addition, some of the same industry allies that opposed Englin’s bill tacked their lobbying efforts onto the opposition movement against HB 2389. Ultimately, the bill met the same fate as Englin’s, failing to pass out of the House Finance Subcommittee.Despite this willingness to make government facilities smoke free, as of August 2006 the governor was still opposed to the idea of mandatory workplace or restaurant smoking restrictions for private employers, stating “I think there is a legitimate question about the reach of government when it comes to having to mandate [smoking restrictions].”He also felt that this would extend the police powers of the state too far,vertical farming solutions and that private employers should voluntarily adopt policies that would influence other employers without government intervention, as the law firm at which Kaine was a managing partner had done in the 1980s.By late 2006, Kaine decided to act. On October 26, 2006, he signed Executive Order 41, which prohibited smoking in most executive branch buildings, including state-owned vehicles. The new rules were to be implemented on January 1, 2007, and affected nearly 100,000 government employees.As issued by Gov. Kaine, Executive Order 41 prohibited “smoking in offices occupied by executive branch agencies and institutions, including institutions of higher education … [and] in any other building operated by executive branch agencies and institutions.” Exempted were correctional facilities, in which smoking would be allowed “in accordance with guidelines set by the Director of the Department of Corrections,” and mental health facilities, in which smoking would be allowed “in accordance with guidelines set by the Commissioner of Mental Health, Mental Retardation, and Substance Abuse Services.” In addition, the Secretary of Administration was directed “to take necessary steps to publicize available state employee benefits for smoking cessation and to encourage employees to avail themselves of these benefits.” Finally, smoking was prohibited in all state-owned vehicles except for state police vehicles, in which smoking would be allowed “in accordance with policy set by the Superintendent of State Police.”The final guidelines for Executive Order 41 were issued on January 1, 2007 by Viola Baskerville, the Secretary of Administration, in consultation with the Commissioner of Health. The guidelines required that agency heads and heads of state institutions establish non-smoking guidelines for their properties in accordance with Executive Order 41. Specifically, the owner and/or property manager of any affected facility was required to: post no-smoking signs, permit smoking outdoors on state property grounds provided smokers are 25 feet or more from an entrance or exit, including parking garages, and to provide ash urns to aid smokers in disposal of smoking materials.
Violations were to be addressed in accordance with Department of Human Resource Management policy.In addition to the health rationales forwarded in his early contemplation of the executive order, Kaine mentioned the costs of smoking to Virginians as a benefit of his plan, noting, “State health care costs more than half a billion a year,” and observing that a benefit of promoting nonsmoking practices would be lower healthcare costs.VFHF felt it played a role in Kaine’s promulgation of Executive Order 41. By lobbying his office after the 2006 legislative session, VFHF staff were able to spend time educating the governor’s staff. VFHF fully supported Executive Order 41 when it was announced, with Keenan Caldwell, a VFHF board member representing the American Cancer Society, congratulating the governor for listening to Virginians and “demonstrating leadership on health policy issues on tobacco.”Some health advocates were reticent about Executive Order 41. Robert Call, the chairman of the Medical Society of Virginia, saw the governor’s action as a “great first step,” but expressed the MSV’s position that the Society would “love to see everybody stop smoking.”And while Terry Hargrove, a spokesperson for the ALA, was “very happy” that the executive order was signed, she expressed the ALA’s dissatisfaction for the narrowness of Kaine’s vision.“Now we have to protect all workers,” she said, referring to private employers whose employees were not covered by these worker protections.Local advocates also pointed out flaws in Kaine’s selective implementation of worker protections. J.P. Szymkowicz, the president of Smoke Free Arlington, part of the Health Department’s network of local coalitions, added that “[i]t is sad to hear that [Gov. Kaine] still vigorously opposes a comprehensive ban on smoking in private businesses, including bars and restaurants.”Philip Morris did not challenge the governor’s decision; a Philip Morris spokesperson, Bill Phelps, told the Richmond Times-Dispatch that “Philip Morris understands and agrees that people should be able to avoid being around secondhand smoke particularly in places where they must go, such as public buildings.”Kaine had received a significant amount of campaign contributions from the tobacco industry, $132,025, leading up to his 2005 election victory. Of this, PM/Altria was the largest contributor, giving $53,000. As with the 2005 attempt, strong public opposition from retail, restaurant, and hospitality associations clouded the prospects of the bill. Governor Kaine was lukewarm on the measure, echoing the sentiment of a large number of Virginia legislators that individual proprietors had the right to decide for themselves to adopt smoking restrictions.The opposition in the legislature was lead by Sen. Ken Stolle , who was responding to strong opposition from the restaurant association and from the Virginia Hospitality and Travel Association . The VHTA’s subgroup the Virginia Restaurant Association was also the main statewide organization for restaurants. The VHTA had been an ally of the tobacco industry since at least 1988, and had participated in a number of activities promoting tobacco industry positions, such as working with the Tobacco Institute to establish a network of industry-favorable restaurants and hotels.VHTA was also part of the tobacco industry coalition that opposed the 1990 VICAA.Ultimately, Bell offered a substitute of the bill on the Senate floor that reduced the proportion of required smoke free hotel and motel rooms to 75%, and completely prohibited smoking in restaurants .