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Tobacco sales spike could mean less money than expected

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Illinois

* The state lost a court case after it attempted to shut off the supply of tobacco tax stamps to prevent retailers and consumers from stockpiling cigarettes ahead of the June 24th tax hike of 98 cents per pack. As a result, a buying spree ensued, according to a recent Commission on Government Forecasting and Accountability report…

In June 2011, a typical $56.4 million was collected from the cigarette tax. In June 2012, with the anticipation of the tax increase, the monthly revenue total was $95.8 million, a 70% increase.

Because of that buying spree, tobacco tax revenues are likely to fall off for a while. This is not a new thing, according to COGFA…

Despite a 40-cent increase in the cigarette tax in July of 2002, cigarette tax revenues in August and September (reflecting July and August sales) were disappointing (annual changes of 4.7% and -30.6%, respectively). It was not until October that the expected effects of the tax increase were seen in revenues.

Taking into account the lawsuit and the history, it could be “several months” before tax revenues begin to reflect the tax hike, says COGFA, and that could mean the state won’t meet its $350 million projection…

If tobacco sales drop off as expected, it may be difficult for the State to generate the original projection of $350 million in new revenues for FY 2013, which in turn, would limit the amount of funds available to be matched by the Federal Government.

That $350 million is supposed to be used to leverage federal money for the state’s broke Medicaid program.

[Hat tip: WUIS.]

* Meanwhile, a lawsuit filed by the Chicago Tribune to unseal University of Illinois student records could be impacted by a US Supreme Court decision…

The Iowa Supreme Court says the University of Iowa can conceal hundreds of pages of records related to its investigation into an alleged 2007 sexual assault involving football players.

The court ruled 4-3 that the university can withhold records requested by the Iowa City Press-Citizen newspaper.

The court says releasing them could violate a federal law that prohibits the release of personally identifiable information about students. The court says the records can’t be released in redacted form either, because the newspaper knows the identities of students involved in the case.

The Tribune sued to unseal student records relating to its series of stories about the university’s admissions process for students whose parents had asked legislators for help. A lower court ruled in the newspaper’s favor, but an appellate court ruled that the suit belonged in state court. State law allows Freedom of Information Act requests to be denied if the federal government prohibits disclosure. Federal law strips universities of all their funding if they release student info without parental consent. The appellate court ruled that the matter belonged in state court. Today’s ruling, however, would seem to block the Trib’s case.

[Hat tip: Commenter “PublicServant“]

* Other stuff…

* Last residents moved out of IYC Murphysboro

* Wells Fargo Settles With Illinois Over Racial Discrimination

* Nekritz’ take on Bost’s rant over the rules:

* Editorial: Quinn should nix Leucadia project

* Future of controversial natural-gas plant up to governor

* Editorial: Changing our tune on bag bill

* Forum encourages women to take the lead

* Closure of Auburn Street driving facility angers local officials

* Discipline committee denies Smith’s request for more time

posted by Rich Miller
Friday, Jul 13, 12 @ 10:51 am

Comments

-Federal law strips universities of all their funding if they release student info without parental consent.-

This amazes me. I am a parent of a college student. I am not even allowed to be given information on the balance of the tuition unless my (adult) child authorizes the college to give me that information. I must be missing something. How does parental consent play into this?

Comment by Anon95 Friday, Jul 13, 12 @ 10:57 am
It should read without the student’s consent, not parental.

Comment by PublicServant Friday, Jul 13, 12 @ 11:16 am
I cannot believe they have miscalculated the revinue!!! Seems to be common place at the capitol.

Comment by He Makes Ryan Look Like a Saint Friday, Jul 13, 12 @ 11:35 am
That is the Iowa Supreme Court, not the US Supreme Court, although they were interrupting a federal law.

Comment by Bigtwich Friday, Jul 13, 12 @ 12:00 pm
Bigtwich is right. An Iowa Supreme Court ruling on the meaning of a federal law isn’t binding on Illinois courts. Just persuasive authority.

Comment by Anon Friday, Jul 13, 12 @ 12:26 pm
I know a guy who started collecting money and makes cigarette runs to Missouri. Hopefully the Governor can count that as a job created.

Comment by Honest Abe Friday, Jul 13, 12 @ 1:00 pm
The tabacco tax was just paid in advance by the business community. I would bet they won’t pass the savings on to the smokers.Much like the “JOB CREATORS” pass on their tax savings.

Comment by mokenavince Friday, Jul 13, 12 @ 1:01 pm
On the cig tax hike, I told you so. Didn’t think I’d be saying it this fast, but …

The Congressional Budget Office just released a new study showing that increased cigarette taxes in the long run will cost states MORE in entitlement costs for programs like SS and Medicaid/Medicare as people live longer and use MORE government services.

Can we please stop listening to all the hateful nannies pushing the tobacco tax gouging policies? Tax revenue estimates were a lie, and future cost savings to social programs are also a lie. All we’ve ended up doing is creating a class system where only rich people can afford to use tobacco, legally, and where a smugglers’ black market will end up controlling a huge chunk of the market as they are in Europe. I thought we wanted to reduce crime in Chicago, not fuel it with another black market the gangs can make money off of.

So what now, will Quinn and the Dems just do nothing and watch the unpaid Medicare bills rise by another $300 million this year or will they reduce medical coverage for more of the sick, poor, and old?

Comment by Jeff Trigg Friday, Jul 13, 12 @ 1:11 pm
The federal law in question is FERPA. I think the feds are pretty clear.

From the Dept of Ed web site:

“Generally, schools must have written permission from the parent or eligible student in order to release any information from a student’s education record. However, FERPA allows schools to disclose those records, without consent, to the following parties or under the following conditions (34 CFR § 99.31): (the list does not include media organizations)”

Further: “Schools may disclose, without consent, “directory” information such as a student’s name, address, telephone number, date and place of birth, honors and awards, and dates of attendance.”

The web site: http://www2.ed.gov/policy/gen/guid/fpco/ferpa/index.html

Personally, I do not see how the university could possibly comply the Trib’s request. FERPA is very restrictive. If a parent calls and asks about their child’s registration or class attendance, the university cannot disclose without the student’s permission. This is the case even for a minor! “FERPA gives parents certain rights with respect to their children’s education records. These rights transfer to the student when he or she reaches the age of 18 or attends a school beyond the high school level.” Note the last part. The rights transfer to the student when they enter higher ed, regardless of age.

I would be very surprised if the Trib received anything through FERPA. Colleges and universities are very, very careful not to violate it.

Comment by Pot calling kettle Friday, Jul 13, 12 @ 2:12 pm
should have written: I would be very surprised if the Trib received anything through FOIA.

Comment by Pot calling kettle Friday, Jul 13, 12 @ 2:14 pm
Trigg -

I’d be interested in the link to that study.

I also think it’s a bit premature to be claiming that this has failed already. If you go back through the archives here, I’m on record saying that yes, there will be a dip in sales on the borders for a couple of months, but by September or so we will see that stabilize and start to produce the kinds of revenue that were projected.

The news cycle might be 24 hours a day, but it takes longer than a couple of weeks for anything in reality to show whether it works or doesn’t work.

-All we’ve ended up doing is creating a class system where only rich people can afford to use tobacco, legally, and where a smugglers’ black market will end up controlling a huge chunk of the market as they are in Europe.-

Did you just try to make the claim that we, as a society, have a responsibility to make sure that everyone, regardless of income, has the opportunity to partake in an activity? And that the activity in question is one that is proven to be lethal and quite costly both to the individual and society as a whole? I could spend an hour unpacking that statement, but I’ll just leave you with this quick tip: Take a breath. Go enjoy some sun, read a book, in general, relax. The sky isn’t falling and acting like it is only makes other folks dismiss otherwise rational points. Otherwise you end up looking like you don’t make sense and sound like a jerk.

Comment by Colossus Friday, Jul 13, 12 @ 2:28 pm
In regards to the Iowa case. Does that mean UIS violated FERPA when under Illinois FOIA they were forced to release records related to the woman’s softball team? If you read between the lines, and do some internet detective work, the identity of the victim was not to hard to figure out using the FOIA produced records.

Comment by Anyone Remember? Friday, Jul 13, 12 @ 3:42 pm
Colossus - Ezra Klein’s blog at WashPo has the link to the CBO’s pdf study.

“Did you just try to make the claim that we, as a society, have a responsibility to make sure that everyone, regardless of income, has the opportunity to partake in an activity?”

No, I’m not a socialist. Tax gouging of some products is not even remotely the same thing as the government making the product cheap enough for poor people. Using taxes to turn a $1 product into a $10 product is not the same thing as using subsidies to make a $10 product into a $1 product. I’m not calling for lobster subsidies so poor people can better afford lobster. Take a breath, look past the surface, do some critical thinking and you’ll see the plain difference between tax gouging and subsidies.

Soda and eating out has been shown to increase obesity. What will happen if we tax gouge soda and restaurants like we do with tobacco in order to decrease obesity? Only rich people will be able to afford soda or eating out. Alcohol is even worse than tobacco in causing health problems, should we tax that so heavily that poor people can’t afford it any longer? If we continue following that logic of tax gouging “bad things” we are indeed creating a class system where the poor can no longer afford the taxes on those products.

As a society, its no one else’s business if someone wants to smoke, drink soda, or eat out. If you do think it’s societies’ business, then lets amend the Constitution and ban all of those things for everyone including the rich.

I realize some people hate hearing the truth and think those of us who speak the truth are jerks. That’s their problem, not mine. I’d rather be a jerk than a liar whose lies end up costing everyone else with more unpaid bills and higher debt. I’ll bet you everything I own versus $5,000 of yours that this tax increase doesn’t bring in the $700+ million they claimed it would this year.

Comment by Jeff Trigg Friday, Jul 13, 12 @ 3:49 pm
Premium brands-$4.75 a pack in Valdosta, Georgia. Gas is $2.98 per gallon.

Comment by Bill Friday, Jul 13, 12 @ 4:19 pm
@ Trigg:

- As a society, its no one else’s business if someone wants to smoke, drink soda, or eat out.-

30 years from now, when you say this, you will sound like the crazy uncle at Thanksgiving talking about race in a way that was perfectly acceptable 30 years ago. You have a perfectly valid argument for your case, couched in terms of freedom and responsibility, but for the fact that it doesn’t work. Just like Ayn Rand has a perfectly valid case for Objectivism, but for the fact that it doesn’t work. You and I fundamentally disagree on this point.

Also, one would think Romney taught folks the downside of throwing out bet amounts above 3 digits.

Thanks for the description of where I can find information in lieu of a link. Here’s one for you (I think #1 might be applicable for you): http://www.cracked.com/blog/5-excuses-we-make-doing-terrible-things_p2/

Comment by Colossus Friday, Jul 13, 12 @ 4:45 pm
Colossus - Alluding to racism, Rand, and Romney is classic troll behavior, which is worse than being a jerk. You have nothing of substance to add so you resort to personal insults.

Opposing the government adding $75 to a carton of smokes is just like being a racist? That’s a clown comment, bro.

Ayn Rand? Haven’t read her fiction, I’m more interested in Lysander Spooner, Frederick Douglas and the abolitionist movement that fought the liberal Democrat establishment’s slavery and segregation policies. If you want to cast aspersions from Rand’s period of history it is notable that while Rand was formulating her writings and political ideas, liberal Democrat hero FDR was appointing Democrat Klansmen to the Supreme Court, including Hugo Black. Its interesting how you reject liberty-minded authors, but fully embrace the racist Democrat history that has shown them to think they are superior to other people and entitled to control how those other people live.

Romney’s big bet was bad because if reminded people he was rich. My bet did that same thing? That’s another clown comment, bro.

And finally a link to Cracked. That explains the middle school level of intellect you display with your racist, Rand, and Romney comments. You forgot the Koch brothers in your trolling. If you are going to ignore the issue at hand and turn to small-minded, lame insults you should probably pick on someone closer to your middling intellect level.

As for 30 years from now around the Thanksgiving table, people won’t be equating my thoughts on excessive taxation that targets poor people harshly with racists. They’ll be too busy reminiscing about their youth when they could afford a full Thanksgiving dinner including real butter and cheesecake or pie and ice cream for desert and explaining to their children why they can’t afford the taxes on ice cream any more and describing what cheesecake is since their children have never been able to afford the taxes on it.

The depression left an entire generation of frugal, debt averse, conservative voters behind. The same thing is happening now. There are fewer partisan Democrats now than at any time since the Civil War. Just like with prohibition and abortion, government trying to control free people’s behavior doesn’t work. History does not agree with you on this point.

Comment by Jeff Trigg Monday, Jul 16, 12 @ 3:59 pm