Tobacco ban hurting Silicon Valley early education groups

A ban on flavored tobacco is expected to drain funds for Silicon Valley organizations that serve low-income families.

Last November state voters approved Prop. 31, which bars the sale of flavored tobacco. This comes on the heels of a flavored tobacco ban in San Jose. The unintended consequences of the state measure could reduce tax revenue for early child development programs.

Jennifer Cloyd, executive director of First 5 Santa Clara County, said the public agency could see a decline anywhere from 20% to 40% in tobacco tax revenue over the next several years because of the tobacco tax. She said this has the potential to create cuts in family resource centers and funding to community-based organizations that pertain to health, development and early learning.

First 5 serves families and children through age 5. The organization gets 48% of its revenue from the state tobacco tax, Cloyd told San José Spotlight.

“We’re just now starting to truly feel that (ban),” she said. “It’ll (mean) significantly fewer families will be able to access the services that we fund.”

California voters passed Prop. 10 in 1998 to establish a tobacco tax and allocate the money to programs serving children up to age 5. The move, designed to curb smoking rates, adds a $2.87 tax to a pack of cigarettes. The measure was intended to be temporary, but has been on the books for 25 years.

Revenue from the tax makes up 73% of First 5 Association of California’s budget, which represents all the First 5 chapters from each county in the state. Each local chapter gets a share of the revenue based on consideration of each county’s birth rate.

From 1989 to 2019, smoking in California has declined from 22% to 10%, according to UCSF.

The most the tax ever regenerated was $690 million in 1999-2000. First 5 said it estimates it will receive about $348 million this year, but adjusted its estimates down to $310 million following the flavored tobacco ban. By 2026, the organization is projecting another drop to $280 million, according to CalMatters.

Cloyd said the ban has minimal effect on the 2023-24 fiscal year budget, but could affect the 2024-25 budget.

Avo Makdessian, executive director of First 5 Association of California, said Santa Clara County and all counties throughout the state will be affected by this issue for years to come.

“It’s going to also affect a population of young children, babies, infants and toddlers whose challenges are not always visible to the rest of the population,” Makdessian told San José Spotlight. “These are all critical prevention-focused and systems-focused investments that will be lost in every community around the state.”

For the Santa Clara County Public Health Department, a decline in First 5 funding means the loss of one lactation promotion service this year. The department said it’s fortunate nothing else had to be cut.

“First 5 Santa Clara County is a valued partner of public health,” a department spokesperson told San José Spotlight. “Overall, the decline in tobacco tax revenue is not expected to greatly impact these public health services, and we continue to strive for increased community wellness by both supporting at-risk youth and families and preventing tobacco exposure.”

Makdessian said the state is looking at a short-term solution for revenue streams that target and focus on youth between birth to age 5. He said long-term solutions are being considered by partners across the state to find other ways to help with funding issues.

Cloyd said while the flavored tobacco ban is good policy, it will take state action to help curb the county’s declining revenue.

“Our best bet is for a state-level solution,” Cloyd said. “Whether that be a budget allocation or identification of another sustainable source… Investing in our youngest children has always shown to have the greatest return later.”

Contact Julia Forrest at [email protected] or follow @juliaforrest35 on Twitter.

Editor’s Note: A past version of this story referred to First 5 as a nonprofit.