Oregon’s Legislative Assembly convened for the 2007 Session with the Democrats in control of the House, Senate and the Governor’s office for the first time in 16 years. This one fact sets the stage for one of the most challenging sessions ONSA has ever faced.

The Governor’s proposed 2007-2009 budget contains proposals with the potential to negatively affect business for every neighborhood storeowner in Oregon, starting with the Healthy Kids Program and the proposal to increase Oregon’s cigarette tax by 84.5 cents per pack, plus an increase on other tobacco products from 65% to 95% of the wholesale price. ONSA members received a preview of these proposals in a recent mailing, but for non-members, read on. If you have ignored ONSA’s plea to become a member in the past, the 2007 legislative proposals may give you a good reason to change your mind.

ONSA has been actively engaged in the process of helping legislators understand our industry’s issues since before session began. Over the next few months, as legislative bills come up for consideration, ONSA will need the help of individual members willing to contact their legislators and speak out on specific issues. ONSA will provide talking points and information about which legislators to contact. ONSA members will be notified through e-mail messages and phone calls. Quick responses to these messages will be important. If you have not done so, please provide ONSA with your current e-mail address to receive Legislative Alerts during session. Send to: contact@onsa.net

Tobacco tax increases under consideration…
The Governor’s Healthy Kids Program (HB 2201) is to be funded with cigarette and other tobacco tax increases. The proposal received an initial hearing in a joint committee consisting of the members of the House Health Care Committee and the Senate Health Policy & Public Affairs Committee. Little attention was given to the funding mechanism during the hearings in the joint health committee. HB 2201 swiftly received a “Do Pass” recommendation and the bill was referred to the House Revenue Committee.
The House Revenue Committee is holding a series of hearings on HB 2201 beginning on February 7th, where the focus of the discussions will be on the funding mechanism, i.e. the tobacco taxes. ONSA member, Chris Girard, CEO of Plaid Pantries, Inc. will testify before the committee to outline ONSA concerns about using the unreliable revenue stream from tobacco taxes to fund what the Governor considers to be a priority program.
ONSA’s testimony will explain that the estimates of how much revenue the tax increase is expected to generate are overly optimistic. As ONSA’s retail members are aware, smokers tend to seek out lower cost alternatives when the cost of cigarettes dramatically increases.  Internet sales and tribal sales, not to mention illegal alternatives, are factors that would make the revenue gained from the proposed increase decidedly less than predicted. According to Girard, “The revenue estimates projected by the Revenue office are off by at least $120 million per biennium. This is a dramatic difference, since it is half of the estimated $235 million the tax increase (projected total for second biennium) is projected to bring in.”

In addition, if HB 2201 is approved as currently written, Oregon’s cigarette tax would increase to $2.025 per pack, equal to the State of Washington and 3rd highest in the nation. Once the proposed cigarette tax increase is implemented, not only would Washington consumers no longer have an incentive to purchase cigarettes in Oregon, but Oregon consumers would have greater incentives to seek out less expensive options.