Tobacco-funded group sues over Montana citizen tax measure

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A tobacco industry-funded group wants to change the wording of a citizen's ballot initiative that would significantly raise Montana's tobacco taxes, a legal challenge that is part of the group's expensive effort to defeat the measure when it goes to voters in November.

The lawsuit filed with the Montana Supreme Court Monday by Montanans Against Tax Hikes takes issue with specific phrasing contained in the 135-word ballot statement, saying the language is incorrect, will cause confusion and prevent voters from casting an informed ballot.

The initiative seeks to raise the state's tax on a pack of cigarettes by $2 to $3.70, on snuff to at least $3.70 per 1.2-ounce can and tax e-cigarettes and vaping products for the first time.

The new revenue, estimated to reach $74 million a year by 2023, would be used to pay for the state's share of Medicaid expansion, which enrolls nearly 100,000 people and would otherwise expire next year if lawmakers don't renew it. Money from the tax increase also would go to stop-smoking programs and health programs for the elderly, disabled and veterans.

The group is challenging the legal review by Attorney General Tim Fox, a Republican, of the initiative and asking the court to order Fox to change the wording, but not remove the measure from the ballot.

"The Attorney General serves as the gatekeeper to the ballot," the group's lawyer, former U.S. Attorney Bill Mercer, wrote in the request to the court. "This is exactly the type of legal deficiency that is within the scope of the Attorney General's review."

The ballot committee created to support the initiative, Healthy Montana for I-185, said the tobacco industry is trying to create confusion by filing the lawsuit instead of helping voters understand the choice they will have in November.

"Big Tobacco will try anything to protect their profits at the expense of Montana's health," said Amanda Cahill, a spokeswoman for the pro-initiative group and a lobbyist for the American Heart Association. "Pursuing an unnecessary legal challenge while wasting taxpayer dollars appears to be part of Big Tobacco's playbook nationwide — it's unfortunate to see it happening Montana."

Montanans Against Tax Hikes is funded by the lobbying arms of the companies that make Marlboro and Camel cigarettes. Altria Client Services and RAI Services Company have donated to the group a combined $1 million so far in personnel, research, legal services and other in-kind contributions, according to a campaign finance report filed to the state commissioner of political practices last Wednesday.

Those same two companies spent more than $200,000 last year to kill a similar bill that was moving through the state legislature, according to lobbyist disclosure forms. Then, the companies hired additional lobbyists and coached witnesses who testified against the measure to defeat it in the Montana House of Representatives.

Now the companies are funneling more resources to the anti-ballot initiative group, which is not only spending hundreds of thousands of dollars in legal fees, but appears to be gearing up for a major media campaign after spending tens of thousands of dollars on polling, focus groups and test ads, according to the campaign finance report.

The group's treasurer, Republican public affairs consultant Chuck Denowh, did not return a telephone message seeking comment but said in a statement that the ballot initiative is a massive new tax increase that permanently expands Medicaid but doesn't allocate enough money to pay for it.

"Montanans Against Tax Hikes plans to run a campaign and make sure voter understand why they should reject I-185," Denowh said in the statement.

Millions of dollars from the tax increase also would go to the state's treasury under the existing formula for allocating tobacco taxes, but that is not mentioned in the ballot language. Montanans Against Tax Hikes is asking the state court to change the wording to let voters know that a portion of the revenue will go to the state general fund.

The group also takes issue with how the ballot statement calculates the percentage change of the wholesale tobacco tax and that it describes the tax increase for snuff by weight, not by can.

The lawsuit comes after the Supreme Court ruled in May against removing a different citizen's initiative from the ballot over a technical challenge to its language. The court disagreed with the Montana Mining Association's argument that the attorney general's legal review was faulty of the measure to increase the requirements for new mines' cleanup plans.

Fox spokesman John Barnes said the attorney general's office stands by its legal review of the tobacco tax measure, as it did with the mining initiative.

The state has until Aug. 13 to respond in court. That's just 10 days before the deadline for Secretary of State Corey Stapleton, a Republican, to certify the candidates and initiatives that are to appear on the ballot.

Stapleton Chief of Staff Christi Jacobsen said the certification won't be delayed for the court case, raising the possibility that ballots may have to be re-printed if the court orders the language changed after the deadline. "We will cross that bridge if we get there," Jacobsen said in an email.

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This version corrects that the group is named Montanans Against Tax Hikes, not Montanans Against Higher Taxes