In November 1988, in spite of a massive statewide campaign by the
tobacco industry, California voters enacted Proposition 99. The proposition, which
increased the tobacco excise tax by twenty-five cents per pack of cigarettes and
comparable amounts on other tobacco products, financed the largest, most ambitious tobacco
control program in the world. Using the Proposition 99 tax revenues, the state spent as
much as $100 million annually fighting tobacco, which dwarfed the federal government's
activities. At its most effective, in the early 1990s, the Proposition 99 anti-tobacco
education program tripled the rate of decline in tobacco consumption. It spawned an
unprecedented effort at passing local ordinances and led to smoke-free public places and
workplaces, followed by smoke-free restaurants and bars. Yet the idea for Proposition 99
did not come from the nonsmokers' rights activists who had defeated the tobacco companies
in San Francisco's Proposition P campaign, the voluntary health agencies, or the medical
establishment. It came from an environmentalist.
The leaders of Americans for Nonsmokers' Rights (ANR), in the aftermath
of Propositions 5, 10, and P, decided to concentrate on passing local ordinances because
they understood that cities and counties presented a forum in which the grassroots
organizations' power was amplified and the tobacco industry's power was muted. They had no
interest in another bruising election, much less a state-level campaign. The voluntary
health agencies ”the American Lung Association (ALA), American Cancer Society (ACS),
and American Heart Association (AHA) ”were slow to embrace policy interventions to
protect public health, sticking to the medical model of pursuing health one patient at a
time. The medical establishment was preoccupied with increasing the amount of money
available to pay for the delivery of medical services and with making it harder to sue
Early in 1986 Gerald Meral, executive director of the Planning and
Conservation League (PCL), a statewide California environmental group based in Sacramento,
approached his friend Curt Mekemson, who worked for the ALA, to discuss his idea of
increasing the tobacco tax by five cents and using the proceeds for environmental
programs. Such a tax would raise the price of cigarettes and reduce smoking, a goal of
Mekemson's, while raising money for environmental programs, one of Meral's goals. Meral
knew that Mekemson, in his previous job as executive director of the Alaska Lung
Association, had spearheaded the successful effort to double Alaska's cigarette tax from
eight cents to sixteen cents.
Mekemson put Meral off: I told Gerry, no, I wasn't
interested. I was going backpacking for six months, but I might talk to him afterwards. So
I went off and did my backpacking trip. 
Meral did not take no for an answer. In September 1986, when Mekemson
returned from backpacking to work as the legislative director of ALA's Sacramento Emigrant
Trails affiliate, Meral cornered him again with the same question.
This time Mekemson said yes.
Mekemson and Meral recruited two other legislative advocates: Tony
Najera, director of government relations at ALA, and Betsy Hite, director of public issues
at ACS. The four began conducting research and planning strategy. Although Meral had
originally proposed an increase of only five cents per pack, Mekemson felt that the
increase should be larger and that revenues should also support tobacco prevention and
education programs. In an October memorandum to Najera, Mekemson stated that
the majority of the funds should go toward supporting health related programs, [and]
that within health related programs our greatest focus should be on prevention [with] a
portion of the funds directly related to the smoking issue. 
The Coalition for a Healthy California
Several events in September and October 1986 gave the tax effort
additional momentum and legitimacy. Mekemson persuaded Assembly Member Lloyd Connelly
(D-Sacramento) to join the effort. Connelly, a highly respected figure in the Assembly,
brought a significant leadership presence to the tobacco tax effort, both organizationally
and politically. He was drafted into the effort over a breakfast. According to Mekemson,
Lloyd was along. Connelly was a longtime friend and acquaintance of
mine and he called me up and said he wanted me to tell him Alaskan bear stories because
he's into all this wilderness stuff. ¦So we had breakfast at the Fox and the Goose
and I told Lloyd all the bear stories. And he wanted to know what I was doing. And I said,
Well Lloyd, I think I want to take on this tobacco tax issue.
¦What caught Lloyd's attention ¦was the impact that increasing the tobacco tax would
have on reducing tobacco use among kids. Bringing Lloyd on brought in a lot of credibility
to the effort, and his own incredible energy and ability to organize things. ¦And
he committed one of his staff people to working with us.
Over breakfast, Connelly said it was hopeless to get a tobacco
tax increase through the Legislature. He was willing to be involved only if the groups
were willing to press ahead with an initiative. Proposition 99
Meral used his political skills to broaden the range of groups
interested in increasing the tobacco tax. He convinced the Senate Office of Research to
hold an informal meeting on October 14, 1986, with representatives from the PCL, ALA, ACS,
ANR, California Teachers Association, Senate Revenue and Taxation Committee, California
Medical Association (CMA), Connelly's office, and the Senate Office of Research itself.
This informal meeting served several purposes: it increased the tax effort's legitimacy,
defined the potential participants of a coalition, and provided a forum in which to
discuss strategies and goals early in the process.
Most of the research and organization, however, was still done by the
ALA, ACS, PCL, and Connelly's office. Mekemson and Najera set the agenda for the meeting
by preparing a draft paper that identified the specific issues and requirements for
passing a tobacco tax increase. Their paper raised the following
- What was the case for increasing the tax? There were three distinct supportive
arguments: the impact on smoking and health, the po enefits from programs supported by the
new revenues, and the high economic costs of smoking. In addition, the time was ripe.
California's cigarette tax of ten cents had not been increased since 1967. Every other
state except Virginia had increased its tobacco tax since 1967; only six other states had
lower taxes than California, and four of those were tobacco producing states.
- Which is the best approach for increasing the tax ”an initiative or the
Legislature? Because of the tobacco industry's lobbying power in Sacramento, enacting
a tax increase through the Legislature seemed hopeless since it had defeated thirty-seven
bills to do so since 1967. Although an initiative meant mounting a major election campaign
against the tobacco industry, it seemed to be the only way to increase the tax. In spite
of the failure of previous statewide initiatives ”Propositions 5 and 10
”conditions seemed favorable for this one. Public attitudes toward smoking were
changing and there was a large societal cost associated with smoking. In addition, by
using the initiative process, the proponents could decide the amount of the tax increase
and how the money would be spent. Proponents felt that, with careful crafting of the
initiative, it would be possible to build public support for the tax.
- How much should the tax be increased and how should the new revenues be allocated?
Early discussion considered an increase of twenty cents to forty cents per pack. A high
tax was favored because it was felt that it would have the largest impact on tobacco
consumption and generate the most revenues, but too high a tax might invite criticism and
loss of public support. The ALA estimated that a 10 percent increase in the price would
lead to a 14 percent drop in tobacco consumption and that every one-cent increase would
generate $25 million in new revenues. Three important points were raised regarding revenue
allocation: How could the money be used to have the greatest impact on tobacco
consumption? How could the money be allocated to gain support from interest groups whose
backing would be necessary to win? How could the money be used to generate the broadest
- What are the technical aspects involved in running an initiative? Qualifying the
initiative would be a difficult task, followed by an even more difficult election
campaign. This process would require employing a professional campaign director,
conducting polling to determine campaign strategy, and hiring professional
signature-gatherers, all of which represented substantial financial and organizational
From the beginning, the public health and environmental advocates had
problems with the CMA. Jay Michael, CMA's vice president for government relations, tried
to limit participants in the planning effort. From the beginning he tried to exclude the
more politically sophisticated Connelly and the PCL so that he would have to deal only
with the voluntary health agencies, which lacked the political muscle and sophistication
that Connelly and Meral had. According to Mekemson, who was trying to help organize the
What we ran into with the CMA was they were concerned about the
breadth of the coalition that we were developing. In other words, they didn't want Lloyd
[Connelly] involved in it; Jay didn't want Lloyd involved in it. They didn't want the
environmentalists involved in it. It seemed to be okay as long as it was Heart, Cancer,
Hospitals, so forth and so on.
And of course, I insisted on continuing to involve Gerry [Meral], I mean
it was Gerry's initial idea. And obviously Lloyd. Lloyd brought in his power and wonderful
ability to analyze things from a political perspective, and his experience with
initiatives as well as Gerry. ¦One day we had an incredible meeting. Jay called me
up, and he said he didn't want Lloyd or Gerry at the meeting, and I insisted on it. And he
insisted right back. So finally I had agreed that I would show up with Tony [Najera of
ALA] and Betsy [Hite of ACS] and we could all sit down and work it out but they are going
to be involved. Well, I just beat Gerry there. I waited outside CMA's offices on a hot
day. I said, Gerry, here's the situation. Then Lloyd came along
and I said, Lloyd, here's the situation.
And Lloyd just got that look in his eyes and said, No way,
he marched in, left us standing outside. I don't know what he said to Jay,
but when we walked in, Jay was pissed. Obviously absolutely infuriated. Because Lloyd
comes back out and says, Come on in, Gerry. I worked it out.
¦That was the last meeting we had at the CMA building because ¦. put them right over
here [at ALA of Sacramento “Emigrant Trails], not on neutral ground, on our
On November 20, 1986, Connelly sent a letter inviting potentially
interested organizations to join the effort to increase California's tobacco tax and cited
three objectives of the tax: to reduce teenage smoking, to raise revenues to fund public
awareness campaigns, and to reduce the overall suffering and financial burden caused by
tobacco. On December 4, 1986, Connelly hosted a meeting to
identify organizations that might support the tobacco tax effort.
Prior to this meeting, George Williams, executive director of the ALA of
California, and the ALA board of directors set the standard of commitment by providing
$50,000 to support the tobacco tax effort. This very large (for a voluntary health agency)
financial commitment showed the ALA's dedication to the effort and forced other agencies
to be ready to make the same financial commitment. Mekemson saw this early and substantial
commitment as a key factor in establishing a significant anti-tobacco education component
of the emerging initiative. He observed,
It said to everybody out there, This is really a serious
proposition, and that's what we had to accomplish. In other words, we had to
show ¦that this was something that's going to happen. But the other important thing that
the $50,000 does is that it really bought the American Lung Association a seat at the
table. For any negotiations that took place or happened, we would be a key player. That
became important, especially when we decided to divide up the pie ¦we kept running up
against CMA, who would say, Certainly some money should go into education. How
about five percent [of tobacco tax revenues]? ¦So between having the $50,000
contribution from ALAC, and the fact that we started the whole process, and the fact that
the poll supported it, those were the chips I needed to get 20 percent set aside for
prevention in that very intense battle that we had.
The California Association of Hospital and Health Systems (CAHHS) and
the CMA, both major political forces in the Legislature, were now willing to join the
tobacco tax effort. The support of these two medical organizations was viewed as
significant because of their credibility, their potential to provide money, and their link
to individual hospitals and doctors throughout the state. Hite remembered that Jim
Nethery, a dentist who was president of the ACS California Division, worked to involve the
There was a lot friction with all of the groups and CMA. Categorically
it was the groups and CMA. The CMA changed their direction a number of times. We had
verbal promises from their president [Dr. Armstrong] at the time. ¦He and Dr.
Nethery, who was the president of the American Cancer Society at that time, had a number
of discussions that CMA was completely behind us, they'd spend whatever it would take to
get it through; it was a really good public health policy to try and discourage smoking by
raising the tax and by dedicating some of those funds to education. As we went further and
further along in the drafting over the next eight months, CMA became less willing to
commit resources and more willing to take the benefits.
The health groups did not know that key CMA leaders were actively
working with tobacco interests on economic issues that were important to organized
medicine, particularly malpractice and tort liability issues, at the same time as they
were meeting with the health groups. In the end, common economic
interests with the tobacco industry would dominate the CMA's decision-making process. In
the meantime, it was in the CMA's interests to push the tobacco tax initiative, both as a
way to increase the pool of money available to pay for medical services and as a
bargaining chip with the tobacco industry in negotiations over malpractice reform and
tobacco products liability.
Mekemson and others had approached ANR and the other leaders in the
fights for Propositions 5, 10, and P, but they declined to get actively involved. As
Hanauer explained, We were deathly afraid that we couldn't win a statewide
initiative. ¦I got snake bitten twice and I wasn't in the mood to try a third time
¦Fortunately there were other people who were willing to do that, and were able to bring
fresh blood into that kind of campaign. Stan Glantz and I and Paul [Loveday] shuddered at
the thought of even getting involved, much less working forty, fifty hours a week at that
point on a statewide campaign. 
ANR supported the concept of a tobacco tax but did not think it could
pass. ANR took the position that any new state-level
initiative would meet the same fate as Propositions 5 and 10: the public's strong early
support would wither in the face of the tobacco industry's expensive counter-campaign. ANR
was also offended that the large, wealthy organizations that were setting up the campaign
demanded a contribution of $25,000 from ANR (at the time, a four-person operation with a
budget under $200,000) for the privilege of sitting on the Executive Committee. In addition, the local ordinance strategy adopted by ANR and other
grassroots organizations was producing important successes at the local level. As already
noted, by the end of 1986, 263 local tobacco control ordinances were in place, 117 of
which were in California, and ANR did not want to put its energies into a statewide
By early January 1987, an informal coalition was ready to attempt to
increase California's tobacco tax. The Coalition for a Healthy California consisted of the
ALA, AHA, ACS, CMA, PCL, CAHHS, and Lloyd Connelly.
The Legislative Effort
The next step in the tax effort was to attempt to pass a tobacco tax
increase through the Legislature. Connelly's invitation letter to the December 4, 1986,
meeting of the Coalition stated, While we are planning to make an initial
effort at the Legislature, we frankly expect the tobacco lobby will defeat us there. After
all, they've been doing so for 20 years.  Still, a
legislative attempt was necessary to develop the Coalition further, to test the various
arguments for a tobacco tax increase, and to educate
the public regarding the desirability of an increase. The process also was designed to
improve the drafting of the initiative by exposing it to public comment. In addition, the
process of going through the Legislature provided some hope of a compromise with the
tobacco industry before an initiative battle had to be faced. It
was also necessary, before going to the voters, to try the legislative approach and
demonstrate that it simply would not work.
As predicted, the Coalition had to contend with the tobacco industry's
lobbying power in the Legislature. Despite the industry's very low public credibility and
the popularity of the tax increase on cigarettes, the industry had been very successful in
defending its political agenda within the Legislature through large campaign contributions
to legislators and its organized and politically influential lobbyists.[12
“14] According to Hite, the Coalition tried to persuade
the tobacco industry to let the bill go through, but without success: We did
our best to tell the tobacco folks, `We're going to do this, we're going to do an
initiative on this, and we've got right on our side and you know we've got the numbers on
our side, you know we're right, we're going to win this. Cut your losses and let's do
legislation.' And they wouldn't. 
The Coalition decided to seek a constitutional amendment rather than a
simple statute for two reasons. First, proponents of the tax increase wanted to avoid
spending limits that the voters had enacted in 1979 when they passed Proposition 4, known
as the Gann Limit (after Paul Gann, its primary sponsor). This constitutional amendment,
which was passed the year after Proposition 13, limited the growth of state government
expenditures to the rate of inflation and population growth. While the Gann Limit did not
prohibit an increase in the cigarette tax, it could have prevented the state from spending
the money raised by the tax. Second, proponents wanted to
protect the tax-funded tobacco education programs from the Legislature, and only the
voters can change a voter-passed initiative. Assembly Member Tom Hayden (D-Santa Monica)
realized that protecting Proposition 99 would be an ongoing battle. Hayden had gained fame
as a leader in the antiwar movement of the late sixties and early seventies as a member of
the Chicago Seven. He eventually channeled his energy into mainstream politics and, in
addition to becoming a member of the Legislature, founded Campaign California, which
pushed a variety of liberal, environmental causes, including several ballot initiatives. Hayden would become one of Proposition 99's defenders in the
Since the proponents of the tax increase were certain of defeat in the
Legislature, they wanted to craft the proposed tax initiative to draw maximum public
support. With money from the CMA, ACS, and ALA, they hired Charlton Research to conduct a
public opinion poll in January 1987 on the topic of raising the tobacco tax. The Coalition sought public input in five major areas: the amount
of the tax, the breadth of the tax, the distribution of the new revenues, the issue of
whether to adjust for inflation, and ways around the Gann Limit.
The poll found substantial public support for a cigarette tax increase
of twenty-five cents a pack (to a total of thirty-five cents): 73 percent supported the
increase (57 percent strongly, 16 percent somewhat) and only 23 percent disapproved of it.
Even after hearing the arguments for and against a cigarette tax increase, support
remained high ”at 68 percent. Nearly two-thirds of the respondents said they would be
likely to vote for the tax increase for the following reasons: tobacco use costs society
billions of dollars, increasing the tax would discourage smoking among young people, and
tobacco use is the single most preventable cause of death in America. And 42 percent said
they would be more likely to vote in favor of a tax increase if they knew large
out-of-state cigarette companies would contribute millions of dollars to oppose the
initiative. Arguments against the tobacco tax were less persuasive. The most popular
argument against the tax ”that increased cigarette taxes mean another government
bureaucracy and more bureaucrats spending more tax money ”made 46 percent of the
respondents less likely to vote for the tax.
The poll provided the Coalition with public feedback and helped to
influence how to allocate new revenues from the tax increase. Funding education programs
to prevent drug and tobacco abuse was the most strongly supported (72 percent), followed
by health research on tobacco-related disease (60 percent), MediCal (Medicaid in
California; 42 percent), and increased funding for parks and wildlife (20 percent). The
results of the poll were significant for two reasons. First, they clearly demonstrated
that the tobacco tax had overwhelming public support. Second, they clearly showed that
funding prevention and education was more popular than funding health care services. The
Coalition decided that the bill would allocate revenues to three major types of programs:
reducing smoking, mitigating the health impact of smoking, and mitigating the nonhealth
impact of smoking.
On February 23, 1987, Connelly introduced Assembly Constitutional
Amendment 14 (ACA 14), cosponsored by Assembly Member William Filante (R-Greenbrae), a
physician, to increase the tax on cigarettes from ten cents to thirty-five cents per pack,
with comparable taxes on other tobacco products. By April 1987, ACA 14 addressed the Gann
Limit and the allocation of revenues. ACA 14 stipulated that the new revenues raised by
the tax would be allocated as follows: tobacco use prevention (47.5 percent, with 27.5
percent for school health promotions aimed at reducing cigarette smoking and substance
abuse and 20 percent for community-based smoking prevention activities); augmentation of
MediCal funding for the treatment of lung cancer, chronic obstructive lung disease, heart
disease, and other tobacco-related illnesses (27.5 percent); clinical research on the
diagnosis and treatment of tobacco-related diseases (15 percent); and efforts by various
local and state jurisdictions to mitigate the nonhealth impact of tobacco use such as
fires and litter (10 percent). The allocation of revenues roughly paralleled the Charlton
Research poll results: education and prevention were favored over health care services,
and environmental programs were given the lowest priority. Only the research allocation
did not reflect the public's preferences as shown in the poll (being placed third instead
The bill's proponents were not the only ones planning strategy in the
spring of 1987. By March, the tobacco industry, far from considering a compromise with
Connelly, was actively planning its opposition. The Tobacco Institute had commissioned
Houston-based V. Lance Tarrance to conduct a private poll to measure public opinion
regarding a tobacco tax increase and to develop the tobacco industry's political strategy
to defeat it. In the polling results, the initiative was winning 63 percent to 30 percent,
with 6 percent undecided.
Like the Coalition poll, the Tobacco Institute poll tested various
arguments and issues to determine potential weaknesses and strengths of the tobacco tax
increase. The results were not encouraging for the tobacco industry:
The data strongly indicate that a campaign for fighting the tax
increase will not be received well by voters. Convincing voters that the tax level is
already too high, and stressing the importance of the Gann Spending Limit law may be
possible, but the bottom line is that people do not like smoking or smokers.
Therefore, anti “cigarette tax support should not be expected to rise substantially
from the levels they are now. The single chance the anti-tax campaign has is to move
this issue away from smoking. These data show moderate levels of support for a campaign
constructed around the following themes: (1) Increased taxation ” any tax
increase is bad; (2) Government mismanagement of tax money; (3) Scheme to bust
the Gann Spending Limit [and] get around state spending law; (4) 25 cents a
pack is too much on a single product ”
unfair. Realistically, these themes could win, if backed by a broad coalition of
anti-tax people. ¦Even with such a coalition, the no
campaign would be expensive and difficult given the very negative feelings against
smoking. [emphasis in original]
Many of these themes were to appear in the tobacco industry's election
campaign against Proposition 99. In fact, the industry named
its front group Citizens Against Unfair Tax Increases.
Although Coalition leaders doubted that the Legislature would approve
ACA 14, they mounted a genuine effort to build public support. Mekemson outlined their
strategy: We could generate a lot of media around it, and that would be the
beginning of our sort of push to the public. We also felt that it would be an opportunity
to take some of the concepts and ideas that we had developed and throw them out on the
table to see whether they would float or not. We also felt that it would be a way of
beginning to sort of feel the tobacco industry out and take a look at what their strategy
would be and arguments. 
In late April, the Coalition held a series of press conferences about
ACA 14, the Coalition, and the tobacco tax effort. The Coalition released its poll data
showing overwhelming support for the tobacco tax, and Assembly
Members Connelly and Filante held a press conference in Los Angeles at which Patrick
Reynolds (grandson of R. J. Reynolds) testified in support of ACA 14.
In early May the independent California Field Poll showed that two-thirds of those
surveyed supported increasing the cigarette tax by as much as thirty cents per pack. The ALA and ACS were also active throughout the spring of 1987,
sending action alerts to local affiliates and urging legislators to vote for ACA 14. Connelly was cynical about the likelihood of legislative action
but pushed it so as to move the initiative process forward.
The tobacco industry took ACA 14 more seriously than Connelly did. A
discussion of how to defeat ACA 14 consumed most of a meeting of the Tobacco Institute's
State Activities Policy Committee on April 3, 1987, in Washington, DC. According to Gene
Ainsworth of RJ Reynolds, ACA 14 received this extensive attention because
given the size of the California cigarette market (9.7 per cent of total domestic
volume), and California's political bellwether position, the specter of a state-wide
initiative to increase the cigarette excise tax is a most serious situation.  The Tobacco Institute State Activities Policy Committee gave
specific directions to its lobbyists to keep the tax issue off the ballot through both the
legislative and initiative processes. The group also
clearly identified the CMA as an important player to be neutralized if the industry was
to avoid an initiative fight over the tobacco tax. Ainsworth observed, It is
clear that the money machine for the Coalition's California tax proposal is the California
Medical Association. Without the promised $1 million from the CMA, the tax initiative
would be difficult to qualify and we could possibly avoid a costly and extremely difficult
state-wide tax battle in 1988. 
Between April 15 and May 18, a Sacramento lobbying firm representing the
tobacco industry, A-K Associates, mounted a major and wide-reaching campaign behind the
scenes to stop ACA 14. The firm's report to Roger Mozingo, head of the Tobacco Institute's
State Activities Division in Washington, catalogued these activities.
- The California Chamber of Commerce, California Taxpayers Association, California
Retailers Association and California Manufacturers Association all were recruited and went
on record as being opposed to ACA 14. This allowed us the opportunity to meet with and
brief the key people within each of these groups in order to
educate them about ACA 14 and the possible statewide initiative. These groups are now on
record and can be expected to be a valuable resource if needed to actually fight an
- Hispanic Lobbying Associates was retained to generate Hispanic opposition to ACA 14. The
Mexican American Political Association, American G.I. Forum, Latino Peace Officers
Association, California Hispanic Chamber of Commerce, California Hispanic Women's Forum
and the Latin American Pacific Trade Association all officially went on record in
opposition to ACA 14. These groups are still with us awaiting our signal to be turned
loose against the tax Initiative.
- A very successful letter writing campaign to key legislators by
companies and TI [Tobacco Institute] was orchestrated and effectively carried out.
- Personal lobbying of organized medicine began even during the lobbying efforts on ACA 14
in the Legislature. These included personal meetings with the following California Medical
- Bob Elsner, Executive Director.
- Jay Michael, Director of Government Relations.
- Dr. Gladdin Elliott, Immediate Past President.
- Allen Pross, CALPAC Director.
- Dr. Kai Kristensen and Dr. Phillips Gausewitz, San Diego area.
- Frank Clark, Executive Director of the Los Angeles Medical Society.
- Dr. Manny Abrams and Dr. David Olch, Los Angeles area.
- Dr. Frank Glanz and Dr. Marshall Ganns, Orange County area.
- Dr. Ed Hendricks and Dr. Pierce Rooney, central valley area.
- Dr. Michael Lopiano, Santa Barbara area.
- Dr. Paul Dugan, northern California rural area.
- Dr. Tom Elmendorf and Dr. James Moorfield, Sacramento area.
- Dr. Fred Achermann and Dr. Roberta Fenlon, San Francisco area.
- Met with key black political leaders to solicit and begin
solidifying black support among state legislators for the anti-initiative campaign. We met
personally with the following black state legislators or legislative staff:
- Willie Brown, Speaker of the Assembly.
- Maxine Waters, Majority Whip.
- Curtis Tucker, Chairman of the Assembly Health Committee.
- Dodson Wilson, Staff to Speaker Willie Brown.
- Met with David Kim re Korean community and advise [sic] re other possible Asian
- Met with Assemblyman Dick Floyd, Tommy Hunter (Calif. State Pipe Trades) and Jack
Henning [secretary-treasurer of California AFL-CIO] regarding the proposed tax initiative.
- Met continuously with Jack Kelly [regional vice president of the Tobacco Institute] to
coordinate testimony and lobbying activity.
The tobacco industry got its way in Sacramento. When ACA 14 came before
the Assembly Revenue and Taxation Committee on May 18, only seven of the committee's
sixteen members showed up (two short of the necessary quorum), precluding any action on
the bill. Committee chairman Johan Klehs (D-San Leandro) did
not even allow supporters of ACA 14 to testify. Assembly Member
Dick Floyd (D-Wilmington) marched up and down the aisles blowing cigar smoke at supporters
of ACA 14. The tobacco industry's contract lobbyist, A-K Associates, declared victory:
In order to accomplish our anti-initiative strategy to discourage
support for the pro-initiative coalition, we felt it was imperative to attain a decisive
victory in the first committee to show strength and resolve on the part of the opponents
to the proposed tax increase. In fact, when these two bills were heard before the Revenue
and Taxation Committee, they were dealt a crushing defeat. Neither
received a motion, much less a single affirmative vote.
Our major goal of weakening potential support and showing strong
opposition was certainly accomplished. The California Medical Association was shocked that
their intense lobbying effort could not receive one aye vote in
the Committee, considering their campaign support for the members
of the Revenue and Taxation Committee (Organized Medicine ”$80,300 vs. TI
”$17,750 during 1986). The minutes of the proponents' June 17, 1987 organizational
meeting even makes reference to this defeat.
The motion to propose ACA 14 died for lack of a second.
The CMA and the Tobacco Industry
Initiative proponents wanted the CMA involved because, unlike the
voluntary health agencies, it had significant political muscle and it was rich and
accustomed to spending money for political purposes, including initiative campaigns. The
tobacco tax was also appealing to the CMA because it created a new pool of money
”$600 million a year ”to pay for medical services. From the beginning, however,
the relationship between the health groups and the CMA was rocky. Indeed, in 1993,
Connelly reflected, If I had to do it over again, I wouldn't have had CMA in
the room, because they were more trouble than they were worth. 
The tobacco industry was also interested in the CMA's deep pockets and
saw that keeping the CMA out of the upcoming fight over the initiative was crucial. The
industry knew that it would be difficult and expensive to beat the tobacco tax initiative
at the ballot box and decided that the best strategy was to block proponents from
collecting enough signatures to qualify the initiative in the first place.
Since it costs money to run a signature drive and the CMA was the most likely source of
big money, the tobacco industry turned its attention to convincing the CMA to stop
supporting the tobacco tax effort. An A-K Associates report explained strategy this way:
Recognizing that the most effective approach to any such battle is to
contain and, if possible, take away potential resources from the proponents, our initial
goal was to contain the California Medical Association, who had already pledged $1 million
to qualify the initiative. With this kind of resources, there is no way the initiative
could be kept off the ballot. A game plan was formulated to discourage and keep the CMA
out of the initiative. This included possible counter anti-medicine initiatives and
legislation, as well as the use of A-K's considerable contacts within organized
medicine. Having already expended considerable effort in this area during the
Legislative phase of the program we turned our attention almost full time to dissuading
the CMA from joining the fray.
We were immensely successful in this regard. CMA, after considerable
pressure, decided to tokenize the tax initiative campaign with,
at best, a $25,000 contribution and the possible use of their mailing list for a
solicitation letter. To date CMA has not actually given the proponents any campaign
money. The decision was made that no punitive action would be taken in regard to
anti-medicine initiatives or legislation as long as the CMA maintained this
non-participatory attitude toward the tobacco tax initiative. Following are the major
activities that have taken place to date:
- Met with key organized medicine leaders to continue to dissuade them from actively
participating in the proposed tobacco tax initiative.
- Generated some well placed and vocal complaining from organized rank and file membership
throughout the state to the CMA's Council (organized medicine's governing body in
- Arranged for the Council to take the policy position that all requests for political
issue contributions of either staff or resources must first go to their Finance Committee
for approval before the Council can take action. This effectively took the tobacco tax
initiative issue out of the hands of the current CMA leadership and placed it in the hands
of the old guard. This placed a huge roadblock in front of people
like Dr. Armstrong, the current CMA President, who is an avowed anti-tobacco crusader and
was one of the major witnesses in support of ACA 14 in the Assembly Revenue and Taxation
- Made multiple trips to San Francisco to meet with key CMA
executive staff to firm up their opposition to CMA's participation in the initiative.
- Arranged for the Golden State Medical Society (statewide black physicians organization)
to object to the CMA's participation in the initiative.
- Met with several legislators who are anti-medicine for various personal and political
reasons to have anti-medicine legislation drafted and leaked to the right CMA leaders. [emphasis different from original]
Initiative proponents complained that the CMA was not enthusiastically
supporting the initiative effort, but they had no idea of the depth of the connections
between the CMA and the tobacco industry.
The Napkin Deal
Tort reform was an active issue before the Legislature at the same
time as ACA 14, and the CMA needed to protect its Malpractice Insurance Compensation
Reform Act (MICRA). In 1975 the CMA had persuaded the Legislature to pass MICRA, which
capped medical malpractice judgments and the size of trial lawyer contingency fees. MICRA
had launched an ongoing fight about product liability among doctors, trial lawyers,
insurance companies, manufacturers, and others, with everyone willing to make substantial
campaign contributions to block everyone else from getting what they wanted through the
The manufacturers and insurance companies, tired of dealing with the
Legislature, had used the initiative process to pass Proposition 51 in 1986. Proposition
51 ended the legal doctrine of joint and several liability whereby
the wealthiest defendants in multi-defendant lawsuits paid the vast majority of the
damages if other defendants did not have the resources. The insurance companies were
willing to go to the ballot again to pass an even more favorable law. On the other side,
the trial lawyers and consumer groups were willing to try to pass their own initiative
that would make it easier to sue and recover damages.
On September 10, 1987, Assembly Speaker Willie Brown (D-San Francisco),
who had by the end of the 1988 election cycle received $125,900 in campaign contributions
from the tobacco industry, hosted a dinner meeting at Frank Fat's, a Sacramento restaurant
popular with Capitol movers and shakers. He invited the
trial lawyers, the CMA, and the insurance companies to work out a tort reform deal that
would accommodate all of their interests and avoid a very costly initiative battle. They
were joined by the tobacco industry.
The dinner guests (public health and consumer groups were excluded)
worked out a nonaggression pact in which everyone at the table got something. Insurance
companies got protection from lawsuits and avoided regulation of their industry, doctors
kept their existing liability protections and got a higher standard of proof that a victim
had to meet to receive damages, and trial lawyers got larger contingency fees to
compensate them for the fact that the cases would be harder to win. The tobacco industry
(and producers of castor oil, butter, sugar, and alcohol) got virtual immunity from
lawsuits based on consumer use of its inherently unsafe product.
The deal was written on a napkin; the Napkin Deal
emerged as a legendary political deal in Sacramento.
The resulting bill, introduced by Senator Bill Lockyer (D-Hayward), was the subject of a
perfunctory one-hour committee hearing, went to the floor (where it was blocked from
amendment by the leadership), and passed by a wide margin.
The tobacco industry clearly understood the intimate connection between
MICRA and the tobacco tax initiative insofar as it related to the CMA. In its report to
Mozingo of the Tobacco Institute, dated September 24, 1987, shortly after the Napkin Deal
was enacted into law, A-K Associates analyzed the CMA's position:
To date organized medicine has stayed out of the [tobacco tax]
initiative fight. In all honesty, luckily, the CMA's primary objective was tort reform and
they planned to use the bulk of their resources in sponsoring a tort reform Initiative at
the same time as the tobacco tax Initiative would be on the ballot if it should qualify.
Obviously, we used this to our great advantage in convincing CMA to stay out of the tax
initiative. During the last day of the 1987 California legislative session, the trial
attorneys and the proponents of tort reform came to a political compromise which was
subsequently enacted by the legislature. As part of this compromise there was an agreement
to a five year moratorium on tort reform initiatives agreed to by all parties, including
the CMA. This could potentially open up the CMA to re-thinking their position in regard to
the proposed tobacco tax initiative. We are duplicating all of our previous efforts to
assure that this does not happen. [emphasis in original]
The industry understood how central the malpractice insurance reform
issue was to the CMA, more central than Proposition 99. The CMA would be willing to make
some trades to get the tobacco industry's support. When Roger Kennedy, a Santa Clara
County physician who was active in both tobacco control and the CMA, was asked whether he
was surprised when the CMA signed off on the Napkin Deal, he said, I think
that it was something that was so important to the leadership at that time. ¦In
order to preserve that MICRA ¦they probably would have done almost anything. Because that
was number one. 
Meral and Mekemson's idea of increasing the tobacco tax and allocating
some of the money to public health and environmental programs had matured and developed a
committed constituency, led by the ALA and ACS. After documenting public support for their
idea, they made the obligatory attempt at getting the Legislature to act. Following the
bill's defeat, the proponents of the tax increase were poised to start their initiative
campaign and hoped, vainly, that they would receive substantial support from organized
medicine. They had no idea how deeply the tobacco industry had already neutralized the CMA
as they moved into the battle to qualify the tobacco tax initiative for the ballot
campaign for voter support.
1. Mekemson C. Interview with Michael
Traynor. November 18, 1992.
2. Mekemson C. Letter to Tony
Najera re: ALA participation in cigarette tax initiative. October 8, 1986 .
3. Connelly L. Interview with
Michael Traynor. March 11, 1993 .
4. Najera T, Mekemson C. Some
initial thoughts on a cigarette tax initiative. October 14, 1986 .
5. Connelly LG. Letter to Betsy
Tram-Hite. November 20, 1986 .
6. Hite B. Interview with Michael
Traynor. February 26, 1993 .
7. A-K Associates, Kinney P.
Status and campaign plan for tobacco tax initiative. September 24, 1987
. Bates No. 50660 9215/9232.
8. Hanauer P. Interview with Edith
Balbach. June 4, 1998 .
9. Carol J. Interview with Edith
Balbach. August 8 and September 5, 1996 .
10. Carol J. Comments on
manuscript. 1998 October .
11. Mekemson C. Letter to Lloyd
[Connelly], Jerry [Meral], Tony [Najera], Daryl [Young], Charles [Mawson]. Follow-up
thoughts after meeting with Lloyd Connelly on October 22, 1986, re: cigarette tax
initiative. October 27, 1986 .
12. Begay ME, Glantz SA. Tobacco
industry campaign contributions are affecting tobacco control policymaking in California.
JAMA 1994;272(15):1176 “1182.
13. Begay ME, Glantz SA. Political
expenditures by the tobacco industry in California state politics from 1976 to 1991.
San Francisco: Institute for Health Policy Studies, School of Medicine,
University of California, San Francisco, 1991 September.
14. Sylvester K. The tobacco
industry will walk a mile to stop an anti-smoking law . Governing States
Localities: Congressional Quarterly 1989 May;34 “40.
15. Paddock RC. Proposed 25-cent
boost in cigarette tax rejected . Los Angeles Times 1987 May 19;3.
16. Green S, Chance A, Richardson J, Rodriguez
R, Smith K. California political almanac 1993 “1994.
Sacramento: California Journal Press, 1993.
17. Rund CF, Henne JC. The
attitudes and opinions of California voters toward a cigarette tax increase.
San Francisco: Charlton Research Company, 1987 February.
18. Mekemson C. Letter to Betsy
Tram re: some initial thoughts on the raw poll results as they relate to the proposed
cigarette tax legislation. February 10, 1987 .
19. V. Lance Tarrance & Associates.
California Constitutional Amendment Survey: A confidential report prepared for the
Tobacco Institute. Houston: Tarrance Hill Newport & Ryan, 1987 March.
Bates No. 50661 0043/0062.
20. Hinerfeld DS. How political
ads subtract . Washington Monthly 1990 May;12.
21. Hite B, Mekemson C.
Californians overwhelmingly support tobacco tax increase . News release,
April 21, 1987.
22. Howe T, Hite B, Mekemson C, Shannon T.
Tobacco heir supports cigarette tax increase in California at informal
hearing . News release, April 24, 1987.
23. Field M. Californians favor
more restrictions on smoking in public places, would approve big boost in cigarette tax.
San Francisco: California Poll, May 18, 1987.
24. Hite B. Letter to the
Honorable Johan Klehs. May 12, 1987 .
25. Najera T, Mekemson C. Letter
to ALAC Board of Directors, ALAC Legislative Staff Workgroup, CTS Executive Committee, CTS
Government Affairs, Affiliate Coordinators of Legislative Affairs, Affiliate Network
Coordinators, Affiliate Presidents, Other Interested parties, re: ACA 14 and AB 2408
”increase cigarette taxes. May 4, 1987 .
26. Ainsworth G. Memo to G. H.
Long and P. C. Bergson. April 9, 1987 . Bates No. 50661 0209/0210.
27. Wiegand S. Cigarette tax
proposal dies in Assembly . San Francisco Chronicle 1987 May 19.
28. Begay ME, Traynor M, Glantz SA.
Extinguishing Proposition 99: Political expenditures by the tobacco industry in
California politics in 1991 “1992 . San Francisco: Institute for Health
Policy Studies, School of Medicine, University of California, San Francisco, 1992
29. Glastris P. Frank Fat's
napkin: How the trial lawyers (and the doctors) sold out to the tobacco companies
. Washington Monthly 1987 December;19 “25.
30. Richardson J. Willie Brown.
Berkeley: University of California Press, 1996.
31. Kennedy R. Interview with
Edith Balbach. April
1, 1997 .