Budget committee approves $3 million cut to SD’s tobacco-use prevention fund

A South Dakota legislative budget committee advanced a bill on Tuesday at the Capitol in Pierre to reduce state funding for tobacco and vaping prevention efforts.

The Senate Appropriations Committee voted to decrease annual funding for the state’s Tobacco Prevention and Reduction Trust Fund from $5 million to $2 million, going against the wishes of a previous committee that voted to set the funding at $3 million. South Dakota could still access an additional $1 million in potential federal tobacco prevention grants, said Bureau of Finance and Management Commissioner Jim Terwilliger.

The fund sustains the South Dakota Tobacco Control Program, aimed at preventing South Dakotans from using tobacco products and helping residents quit through the South Dakota QuitLine.

Terwilliger said the state needs to “be smarter with tobacco prevention dollars” and make budget cuts to help cover a $62 million increase in Medicaid costs. He said the cut is justified by a decline in tobacco use in the last decade.

South Dakota spends the highest amount per smoker on prevention efforts, Terwilliger said, at $20.19 while the national average is $10.53, based on state Department of Health and North American Quitline Consortium data.

Tobacco tax revenues, which support the trust fund and the general fund, have declined because of less tobacco use in the state, dipping to a projected $41.1 million this fiscal year. But $75.5 million in Medicaid costs “as a result of smoking” demonstrate the need for continued prevention, said Jennifer Stalley, a lobbyist for the American Cancer Society Cancer Action Network.

Stalley told lawmakers that the better solution to addressing the state’s budget concerns while still prioritizing prevention would be to increase the tax rate on tobacco products and expand taxable tobacco products to include e-cigarettes and other nicotine products “that did not exist” when the trust fund was created.

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“We’ve not changed the rate of tobacco tax in nearly two decades,” Stalley said. “Tobacco taxes are and still remain the most effective way to reduce tobacco use, but they’re a declining source of revenue by design.”

Another bill, introduced by Mitchell Republican Sen. Paul Miskimins, would implement both of Stalley’s recommendations while retaining the annual $5 million for the trust fund. It would also create a $10 million annual health care workforce development fund if more than $60 million is collected in tobacco tax revenue.

Miskimins’ bill is scheduled to be heard Wednesday in the Senate Taxation Committee. The bill reducing funding for the tobacco trust fund will head to the Senate.

EDITOR’S NOTE: This story has been updated since its original publication with the addition of the sources of per-smoker prevention spending.