California's Proposition 29 Proves a Nail Biter

LOS ANGELES -- California voters headed to the polls yesterday to pull the lever on Proposition 29, and the outcome is still too close to call. If approved, the ballot question would raise the cigarette state excise tax $1 per pack -- to $1.87 -- and an equivalent tax increase on other tobacco products that would generate between $700 and $800 million annually.

Early indications, however, seem to point to a victory for retailers and tobacco companies. According to a report by the Associate Press Wednesday morning, Proposition 29 was losing by just over 1 percent, or about 64,000 votes out of more than 3.8 million counted. And as the news agency pointed out, even with all precincts reporting, there typically are many late-arriving ballots from early and absentee voting not counted until after election day. These ballots typically compose up to 20 percent of all votes, meaning potentially hundreds of thousands of votes were still to be counted statewide.

Even though officials were still counting votes, Bonnie Herzog, managing director, beverage, tobacco and consumer research at Wells Fargo Securities, agreed with early reports that the voters appeared to turn down the tax proposal.

"While this count may not include all absentee ballots, we doubt absentee ballots would be enough to ultimately pass the tax increase," she wrote Wednesday morning. "If Prop 29 does indeed fail, this would be a huge victory for the tobacco companies, who spent tens of millions of dollars in efforts to oppose the measure."

As CSNews Online recently reported, public support for Proposition 29 began strong but began to waver in recent weeks. A survey by the Public Policy Institute of California (PPIC) released on May 23 found 53 percent of likely voters said they would vote yes, 42 percent said they would vote no, and 5 percent were undecided on the measure. And while the PPIC found that slightly more than half of likely voters were still leaning in favor of the proposal, the support was down dramatically from an earlier poll in March. At that time, 67 percent supported it, 30 percent opposed it, and 3 percent were undecided. However, as PPIC pointed out, that was before any active campaigning for and against Prop 29 began.

In addition, numerous newspapers came out against the proposal, with at least 18 writing editorials urging voters to turn the measure down. Also coming out against Proposition 29 was the No on 29 committee, a coalition of more than 3,200 groups and individuals who fought against the tax increase.