Arts leaders in Cuyahoga County were celebrating earlier this year with state approval of a possible expansion of the tobacco tax. In 2007, voters approved sending 30 cents of tax from each pack of cigarettes to arts funding. The revenues, which are distributed by Cuyahoga Arts & Culture, have been declining steadily as fewer people buy cigarettes.
Gov. Mike DeWine in January signed Senate Bill 164, giving Cuyahoga County the right to ask voters to expand the tax to vape products and to charge the cigarette tax as a percentage of the price rather than a flat 30 cents. That’s now in jeopardy thanks to a state budget proposal which would instead allow the county to ask voters to increase the fixed-rate tax.
Fred Bidwell is chairman of the board for Assembly for the Arts, one of the nonprofits which gets funding from Cuyahoga Arts & Culture. He was part of the team that worked on the original expansion proposal, as cigarette tax revenues have fallen by almost half, to $11 million annually, since 2007. He said part of the reason for rolling back Senate Bill 164 is that the mechanism for collecting the funds on cigarettes doesn’t actually exist for vape products.
“It is a bit of a disappointment, but I will say, from a revenue standpoint, vapes are not as big as people think,” he said. “The pricing flexibility that the new legislation gives us makes us comfortable that we'll reach our revenue goals.”
If the provision is approved, Bidwell said arts leaders would conduct listening sessions to determine the amount to increase the tax. He estimated that voters wouldn’t see an initiative on the ballot until next year.
One other issue with the percentage-based proposal is it may conflict with Ohio’s 1998 agreement with the tobacco industry, requiring such taxes to be based on per-pack-prices, according to Dan Tierney, a spokesperson for DeWine.
“There are concerns a wholesale tax could endanger Ohio receiving funds due to noncompliance,” he said in a statement.
