2006 Initiative Petitions
Approved for Circulation in Missouri

Tobacco Tax, 2006-23
White Paper

NOTICE: You are advised that the proposed constitutional amendment changes, repeals, or modifies by implication, or may be construed to change, repeal, or modify by implication, the following provisions of the Constitution of Missouri - Section 1 of Article II, Sections 1, 36, 38(a), 39, 40, and 51 of Article III, Sections 1, 5, 12, 13, 15, 17, 19, 22, 28, 36(a), 37, 37(a), 39, 48, and 51 of Article IV, Section 3(b) of Article IX, Sections 1, 3, 16, 17, 18, 18(e), 19, 20, and 21 of Article X, and Sections 1, 2(a), and 2(b) of Article XII.

THE PROPOSED AMENDMENT

Be it resolved by the people of the state of Missouri that the Constitution be amended:

One new section is adopted by adding one new section to be known as Section 37(b) of Article IV to read as follows:

Section 37(b).1. For the sole and exclusive purpose of providing additional moneys to be expended and used only for tobacco use education, prevention, and cessation programs and initiatives, and the improvement of health care access and treatment in both urban and rural areas of the state, on and after January 1, 2007, a tax equal to four cents per cigarette and twenty percent of the manufacturer's invoice price before discounts and deals on other tobacco products shall be levied and imposed upon the sale of cigarettes and other tobacco products. The tax imposed by this section shall be in addition to other taxes imposed by law on the sale of cigarettes and other tobacco products and shall be collected in the same manner and at the same time as the taxes imposed by law upon the sale of cigarettes and other tobacco products.

2. As used in this section 37(b) of Article IV -

"Cigarette" means an item manufactured of tobacco or any tobacco substitute, wrapped in paper or any substitute therefor, weighing not to exceed three pounds per one thousand cigarettes and which is commonly classified, labeled, or advertised as a cigarette;

"Manufacturer's invoice price" means the original net invoice price for which a manufacturer sells other tobacco products to a distributor, wholesaler, or first seller in the state as shown by the manufacturer's original invoice;

"Other tobacco products" means cigarette papers, clove cigarettes, cigars, smokeless tobacco, smoking tobacco, or other form of tobacco products or products made with tobacco substitute containing nicotine;

"Cigar" means any roll for smoking, except cigarettes, made chiefly of tobacco or any tobacco substitute;

"Smokeless tobacco" means chewing tobacco, including, but not limited to, twist, moist plug, loose leaf and firm plug, and all types of snuff, including, but not limited to, moist and dry;

"Healthy Future Trust Fund" means the fund created by subsection 3 of this section;

"Tobacco Use Prevention, Education, and Cessation Account" means the account created by subsection 3(1) of this section;

"Health Care Access and Treatment Account" means the account created by subsection 3(2) of this section;

"Net proceeds" means the total moneys collected and deposited in the Healthy Future Trust Fund pursuant to the tax imposed by this section minus the amounts transferred from or paid out of the Healthy Future Trust Fund pursuant to subsection 5 of this section;

"Department of health and senior services" means the executive department established by chapter 192, RSMo, or any successor department or agency;

"Missouri Medicaid beneficiary" means an individual who receives medical assistance under the Missouri Medicaid program;

"Uninsured Missourian" means a Missouri resident and United States citizen who does not have health coverage through any private insurer, employer-sponsored self-insured plan, government health care program such as Medicaid, Medicare, or similar programs, or any other source;

"Physician" means an individual with a valid and effective license to practice medicine and a valid and effective Missouri Medicaid participation agreement;

"Federal poverty guidelines" means the federal poverty guidelines established pursuant to 42 U.S.C. section 9902(2), as amended, or any successor federal poverty guidelines;

"Missouri Medicaid program" means the medical assistance program administered by the state of Missouri pursuant to Title XIX and Title XXI of the Social Security Act, as amended, and chapter 208, RSMo, and any successors to that program and shall include the State Children's Health Insurance Program and its successors;

"Medicare physician fee schedule" means the Medicare physician fee schedule established pursuant to 42 U.S.C. section 1395w-4, as amended, or any successor Medicare physician fee schedule;

"Safety net clinics" means those clinics with valid and effective Missouri Medicaid participation agreements that provide care to a substantial percentage of uninsured Missourians, as determined by department of social services rule. Safety net clinics shall include, but not be limited to, federally qualified health care centers, community mental health centers, public health clinics, medical school-based clinics, federally-designated provider-sponsored and independent rural health clinics, and hospital-based clinics that provide primary and physician specialty care services to uninsured Missourians;

"Ambulatory visit" means a face-to-face encounter between a safety net clinic patient and a physician, physician assistant, nurse practitioner, nurse-midwife, visiting nurse, or other appropriate health care provider, as determined by department of social services rule;

"Trauma centers" means hospitals with valid and effective Missouri Medicaid participation agreements that have been designated as trauma centers by the department of health and senior services;

"Hospital emergency departments" means the emergency departments of hospitals with valid and effective Missouri Medicaid participation agreements; and

"Level I trauma centers" means hospitals with valid and effective Missouri Medicaid participation agreements that have been designated as Level I trauma centers or an equivalent designation by the department of health and senior services.

3. The Healthy Future Trust Fund is hereby created within the state treasury. The following accounts are hereby created within the Healthy Future Trust Fund:

(1) Tobacco Use Prevention, Education, and Cessation Account; and

(2) Health Care Access and Treatment Account.

4. Beginning January 1, 2007, the state treasurer without legislative action shall credit to and place in the Healthy Future Trust Fund all moneys collected as a result of the tax imposed by this section as said moneys are received. All of the moneys from the tax imposed by this section shall be kept separate from the general revenue fund as well as any other funds or accounts in the state treasury and shall be credited to and placed only in the Healthy Future Trust Fund and the accounts created within the Healthy Future Trust Fund. Any moneys credited to and placed in the Healthy Future Trust Fund and any account created by this section shall be appropriated and used only for a purpose or an initiative which is authorized by this section and shall not be subject to the provisions of section 33.080, RSMo. The unexpended balances of such moneys shall remain in the Healthy Future Trust Fund and in the particular account in which the moneys are placed, and such balances shall not revert to the general revenue fund. All interest which accrues upon the moneys in any account within the Healthy Future Trust Fund shall be added to such account and shall not be credited to the general revenue fund. Except as otherwise provided in this section, generally applicable laws concerning use of public funds shall apply to the Healthy Future Trust Fund.

5. (1) The actual costs of collecting the tax imposed by this section shall be paid from the moneys in the Healthy Future Trust Fund as may be provided by law, not to exceed two percent of the total moneys collected;

(2) The department of revenue shall refund moneys overpaid or erroneously paid pursuant to this section as may be provided by law;

(3) On a monthly basis, the director of the department of revenue shall determine whether the tax imposed by this section has caused a reduction in the amount of moneys collected and deposited into the fair share fund, the health initiatives fund, or the state school moneys fund pursuant to chapter 149, RSMo. If a reduction in the amount of moneys collected and deposited into any of those funds pursuant to chapter 149, RSMo has been caused by the tax imposed by this section, an amount equal to the amount of moneys that were not collected and deposited into that fund or funds because of the tax imposed by this section shall be transferred from the Healthy Future Trust Fund to the appropriate fund or funds. The aggregate amount transferred to the fair share fund, the health initiatives fund, and the state school moneys fund from the Healthy Future Trust Fund for any month shall not exceed three percent of the total moneys collected pursuant to this section during that same month.

6. The net proceeds of the tax imposed by this section shall be monthly apportioned, distributed, and deposited as follows:

(1) Seventeen and one-half percent of the net proceeds shall be credited to and placed in the Tobacco Use Prevention, Education, and Cessation Account;

(2) Eighty two and one-half percent of the net proceeds shall be credited to and placed in the Health Care Access and Treatment Account.

7. Moneys deposited in the Tobacco Use Prevention, Education, and Cessation Account shall be appropriated by the general assembly to the department of health and senior services, the department of public safety, and the department of mental health for the sole purpose of funding a comprehensive statewide tobacco control program that is consistent with the Center for Disease Control and Prevention's, or its successor agency's, best practices and guidelines for tobacco control programs and is determined by the department of health and senior services to be effective to prevent and reduce tobacco use, reduce the public's exposure to secondhand smoke, and identify and eliminate disparities related to tobacco use and its effects among different population groups. The components of the comprehensive statewide tobacco control program shall include but not be limited to: community programs to reduce tobacco use, chronic disease programs to reduce the burden of tobacco-related diseases, school programs, enforcement of existing policies, statewide programs, counter-marketing programs, cessation programs, surveillance and evaluation, and administration and management. The general assembly may also, as part of the cessation program component of the statewide tobacco control program, appropriate funds in the Tobacco Use Prevention, Education, and Cessation Account to the department of social services for tobacco use cessation programs for Missouri Medicaid beneficiaries, provided that no more than ten percent of the moneys in the Tobacco Use Prevention, Education, and Cessation Account shall be appropriated for such programs.

(1) To ensure effective funding allocations of the moneys in the Tobacco Use Prevention, Education, and Cessation Account within the best practices and guidelines of the Center for Disease Control and Prevention or its successor agency, at least fifteen percent of those moneys shall be appropriated for mass media public education and counter-marketing programs, at least fifteen percent of those moneys shall be appropriated for community programs to reduce tobacco use, at least five percent of those moneys shall be appropriated for surveillance and evaluation relating to all expenditures and uses of the funds, and at least fifteen percent but no more than thirty percent of those moneys shall be appropriated for cessation programs including any funds appropriated for tobacco use cessation programs for Missouri Medicaid beneficiaries.

(2) The department of health and senior services shall promulgate reasonable rules to implement this subsection 7, including rules to determine the overall effectiveness of the statewide comprehensive tobacco control program and its individual components, to establish the eligibility of providers, and to distribute the moneys that are appropriated pursuant to this section for supplemental payments to certain service providers for uncompensated smoking cessation programs.

(3) An oversight committee whose members shall be appointed by the governor with the advice and consent of the senate, and whose number of members shall be provided for by law, is hereby created to assist the department of health and senior services, the department of public safety, and the department of mental health in developing, implementing, and maintaining a strategic plan, in monitoring the use of funds, and in assessing the efficacy of programs funded through the Tobacco Use Prevention, Education, and Cessation Account. The members of the oversight committee shall be persons with experience and expertise regarding public health, tobacco control policies and programs, public education and counter-marketing, and program oversight and evaluations. No member of the oversight committee shall serve as a director or employee of any organization that receives funding from the Tobacco Use Prevention, Education, and Cessation Account. In addition, no member of the oversight committee shall, during the member's tenure on the committee or for three years before joining the committee, receive any salary, grants, or other payments or support from any business that manufactures, distributes, markets, or sells cigarettes or other tobacco products or serve as a director, employee, or consultant of any organization that receives grants or contributions from any such business or that provides legal, lobbying, public relations, marketing, or advertising services to any such business. Each member of the oversight committee shall also agree not to enter into any such financial or business relationships with the tobacco industry for a period of two years after that member's tenure on the oversight committee ends. The oversight committee shall annually provide a publicly available report on tobacco use and its related harms and costs in the state, the allocation of the Tobacco Use Prevention, Education, and Cessation Account funds, and related surveillance and evaluation findings to the general assembly and the governor.

8. Moneys deposited in the Health Care Access and Treatment Account shall be appropriated by the general assembly solely to provide additional funds for the purpose of:

(1) providing medically necessary health care services for individuals with incomes that are 200% or less of the federal poverty guidelines, including services provided through the Medicaid or State Children's Health Insurance Programs established under Title XIX and Title XXI of the Social Security Act, as amended, and any successor programs. Thirty five and one-quarter percent of the moneys in the Health Care Access and Treatment Account shall be appropriated to the department of social services for this purpose. The department of social services shall determine the eligibility criteria for these programs and services. In determining eligibility criteria, the department shall apply a preference in favor of medical programs and services for individuals with medical conditions associated with tobacco use or secondhand smoke, and in favor of new or additional Medicaid benefits or services for custodial parents, the aged, and individuals with medical and mental health disabilities;

(2) providing supplemental payments for primary care and specialist physician services rendered to Missouri Medicaid beneficiaries. Thirty five and one-quarter percent of the moneys in the Health Care Access and Treatment Account shall be appropriated to the department of social services for this purpose. The department of social services shall establish, to the extent funds are available, a Medicaid physician fee schedule that is comparable to the Medicare physician fee schedule;

(3) providing supplemental payments to safety net clinics. Thirteen percent of the moneys in the Health Care Access and Treatment Account shall be appropriated to the department of social services for this purpose. The department of social services shall calculate the supplemental payment to each safety net clinic based on the number of ambulatory visits provided during the prior twelve month period to uninsured Missourians with annual household incomes that are 200% or less of the federal poverty guidelines. Safety net clinics shall submit annual financial reports to the department of social services documenting the number of ambulatory visits provided to uninsured Missourians with annual household incomes that are 200% or less of the federal poverty guidelines;

(4) providing supplemental payments to trauma centers and hospital emergency departments for facility and physician services rendered to Missouri Medicaid beneficiaries and uninsured Missourians. Fifteen and one-quarter percent of the moneys in the Health Care Access and Treatment Account shall be appropriated to the department of social services for this purpose. At least fifty-five percent of the moneys appropriated for supplemental payments to trauma centers and hospital emergency departments shall be used for payments to compensate Level I designated trauma centers for their unreimbursed costs of treating Missouri Medicaid beneficiaries and uninsured Missourians; and

(5) providing supplemental payments for emergency ambulance services provided to Missouri Medicaid beneficiaries. One and one-quarter percent of the moneys in the Health Care Access and Treatment Account shall be appropriated to the department of social services for this purpose.

The department of social services shall promulgate reasonable rules to implement subsection 8. In calculating the payments to be made to health care providers pursuant to this subsection 8, the department of social services shall ensure that total payments do not exceed the cost of delivering the services. As permitted by federal law, the department of social services may seek approval from the federal government and take all other necessary steps to qualify the payments described in subsection 8(1) as eligible for federal financial participation payments through the Missouri Medicaid program. As permitted by federal law, the department of social services shall seek approval from the federal government and take all other necessary steps to qualify the payments described in subsection 8(2)-(5) as eligible for federal financial participation payments through the Missouri Medicaid program. Any application for waiver of federal Medicaid standards which is filed to implement this subsection 8 and which relies solely on the moneys generated by this section to fund the state share of any payments to be made under the waiver shall be exempt from the standards of subsection 5 of section 208.151, RSMo. On or before January 1 of each year, the department of social services shall submit a written report to the governor and the general assembly describing the state legislative changes, if any, that are needed to qualify payments under this subsection for federal financial participation. Notwithstanding any other provision of this subsection, if any of the payments described by this subsection 8 cannot be qualified for federal financial participation at any time, the payments of the state moneys in the Health Care Access and Treatment Account shall still be made pursuant to this subsection 8. The rate of the federal reimbursement allowance assessment may be reduced, in an amount to be determined by department of social services rule, to the extent the moneys generated by this section and payments made pursuant to this subsection 8 offset the need for such allowance to fund Missouri Medicaid reimbursements.

9. The state auditor shall perform an annual audit of the funds and programs established pursuant to this section, which shall include an evaluation of whether pre-existing funding for programs or initiatives has been reduced because of the new funding for such purposes provided through the Healthy Future Trust Fund or any of its accounts. Such audit shall be performed on a fiscal year basis. The state auditor shall make copies of each audit available to the public. Every three years the state auditor shall prepare a comprehensive report assessing the work and progress of the programs established pursuant to this section. Such assessment report shall analyze the impact of the programs, grants, and contracts performed, shall be provided to the governor and the general assembly, and shall be available to the public.

10. Except as otherwise provided in this section, the effective date of this amendment shall be January 1, 2007. The tax imposed by this section on cigarettes and other tobacco products shall be imposed on all cigarettes and other tobacco products in the possession or under the control of any dealer or distributor on and after 12:01 a.m. on January 1, 2007, as determined by department of revenue rule. The initiatives and programs described in subsections 7 and 8 shall be implemented as soon as reasonably practicable, but at least by July 1, 2007.

11. The additional revenue provided by section 37(b) of this article shall not be part of the "total state revenue" within the meaning of sections 17 and 18 of article X of this constitution. The expenditure of this additional revenue shall not be an "expense of state government" under section 20 of article X of this constitution.

12. The net proceeds from the tax imposed by this section shall constitute new and additional funding for the initiatives and programs described in this section and shall not be used to replace existing funding as of July 1, 2006 for the same or similar initiatives and programs.

13. All of the provisions of this section shall be self-enforcing. All of the provisions of this section are severable. If any provision of this section is found by a court of competent jurisdiction to be unconstitutional or unconstitutionally enacted, the remaining provisions of this section shall be and remain valid.