Is The Tobacco Business Now the General Fund’s Only Friend?

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

The general fund is responsible for its core government functions – education, healthcare, prisons. It’s the financial heart of our state.

Naturally, everyone hates it.

Much of California budget politics – and many of our initiatives – consists of making war on the general fund. Indeed, warmaking against the general fund is a bipartisan passion. The Republicans want to starve it of taxes. Democrats and spending interests want to carve out pieces of it to benefit their favored programs. And all of us raid it—by cutting local taxes and tapping the general fund to backfill for local services, by borrowing money to give to children’s hospitals and stem cell researchers and forcing the general fund to pay the debt, and by assuming it will be a backstop for unsustainable pension and healthcare promises made to government retirees.

People get away with crimes against the general fund by telling the public that the general fund is suspect because it leaves discretion to elected officials, who use it for crazy ideas. The fact that this is a giant lie – more than 85 percent of it goes to schools, health and social services and corrections – has never kept people from believing it.

So all initiatives seek to limit that discretion. And letting the people we elect make decisions is something we just can’t stand in California. Our good government groups and our media rail against the very idea, which is sometimes called representative government in other, less advanced places.

In this state, is there anybody who, against all odds, will stand up for the general fund, and for the very idea of a general interest?

Well, there is one group of people. They are the tobacco business.

In 2016, as in previous cycles, Big Tobacco has improbably emerged as the general fund’s only friend. Of course, Big Tobacco’s protection of the general fund is something less than heartfelt. It is self-interested.

Health interests and disease groups keep putting initiatives to raise tobacco taxes on the ballot. Big Tobacco can’t respond by defending itself, or smoking or arguing against tobacco taxes—they’re popular.

So it has taken to making a radical argument – in favor.

So it argues, with big money and ads, that these initiatives, instead of throwing money into the general fund, wall off the revenues they create for the health interests behind the initiative.

The essence of this argument is undeniably true. Though this is Big Tobacco, and so it is made in the most distorted way possible. That’s why you keep hearing in ads that the Prop 56 tobacco tax on this November’s ballot will “steal” from our schools.

It dramatizes the general fund by this leap of logic: because the tax money doesn’t go into the general fund, it doesn’t become part of the Prop 98 education funding guarantee and thus is taking from schools. That’s rich—there are no funds to “steal” if the Prop 56 tax is defeated. So I guess what the tobacco No on 56 ads are really accusing the initiative of is a sort of “pre-crime.”

But if you’re the general fund (and I once impersonated the general fund: http://www.zocalopublicsquare.org/2014/05/08/why-the-state-general-fund-is-mad-at-you/inquiries/connecting-california/), you must take your friends where you can find them.

And all those “outraged” by the no on 56 ads? Look in a mirror. The fact that only the tobacco industry is standing up for the idea of a general interest in California budgeting really ought to make Californians ashamed of themselves.

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