Health plan gets burned after state’s costliest race

After the most expensive political campaign in Oregon history, voters Tuesday overwhelmingly rejected a tobacco tax increase to pay for children’s health care.

The 3-to-2 vote against Measure 50, which would have increased Oregon’s cigarette tax by 85 cents a pack, follows similar defeats in California and Missouri after tobacco makers spent millions to oppose the measures.

In Oregon, Reynolds American and Philip Morris, the makers of Camel and Marlboro cigarettes, spent a record $12 million, primarily on a TV commercial blitz.

The decisive failure kicks a complex public health issue back to the Legislature and Gov. Ted Kulongoski, who have been unable to make health care more accessible for an estimated 576,000 Oregonians who lack insurance.

Opponents downplayed the amount of money they spent to defeat the measure, saying voters didn’t like sticking a tax in the constitution and weren’t convinced bureaucrats needed the money.

“The primary reason is there’s not an appetite out there for more taxes,” said Russ Walker, Oregon director of the anti-tax group FreedomWorks.

Disappointed supporters, who were outspent 4-to-1, chalked up their loss to the tobacco money and vowed to continue working on health care.

“I think that this is just a battle in a long war,” said Gov. Ted Kulongoski before making a concession speech before 100 supporters at downtown Portland’s Benson Hotel.

Later in the evening, Kulongoski said: “The tobacco industry basically bought an election. I don’t think it’s a reflection of what Oregonians think about health care and children.”

In rejecting the tax, Oregonians broke with tradition. They approved cigarette tax increases in 1996 and 2002.

Multnomah County was the only one to pass Measure 50. Statewide turnout was expected to reach more than 50 percent.

Opponents zeroed in on four basic arguments against the tax: There was no way to account for how the money would be spent; it was inappropriate to stick a product tax in the constitution; it was unfair to smokers; and the program was fiscally unsustainable as costs eventually would outstrip revenue.

Labor unions, insurance companies, hospitals and health groups fought back with a $3.4 million campaign that promised the tax increase would go to insure nearly 100,000 children and to discourage more Oregonians from smoking.

Bill Lunch, chairman of the political science department at Oregon State University, called the measure’s failure “an example of an election being bought. It’s as simple as that,” he said, pointing to Oregonians’ previous approval of cigarette tax increases.

But Jim Moore, a political science professor at Forest Grove’s Pacific University, said supporters mounted a weak campaign that failed to set the agenda. Supporters, for example, didn’t rebut quickly enough with ads reminding Oregonians they’ve amended the constitution more than 200 times.

“The tobacco companies were able to say it’s a tax issue, not a health issue, and it’s a government accountability issue, and in Oregon that’s a very powerful message,” Moore said.

The proposal was put on the ballot after Democratic lawmakers failed to get enough Republican support for the tax. Democrats didn’t have the three-fifths vote needed to pass revenue-raising bills in the Legislature, but they had the simple majority needed to ask voters to amend the constitution.

Kulongoski promised supporters the Legislature would revisit the issue in 2009. The crowd called back with pleas to address health care for children during the supplemental session in February.

A glum Senate President Peter Courtney, D-Salem, said he doubts that will happen. “Our kids are losers tonight. I don’t know where we go from here,” he said.

Oregon’s proposal tried to get at the growing number of people without health insurance as premiums grow too pricey for many working families to afford. About one in six Oregonians lack health insurance, including an estimated 116,000 children.

Opponents of the measure said they expect the issue to crop back up, but they’ll remind legislators that there is enough money in the general fund to pay for children’s health care.

“I am delighted,” said Jan Esler-Rowe, who owns a cigar shop in east Portland. “(People) believe there’s a need for it and I support children’ health care, but before you throw more money at it, fix the problem.”

J.L. Wilson, spokesman for Reynolds American, which spent about $5 million to defeat the tobacco tax, emerged from a private party in Salem to say opponents weren’t celebrating. He said the gathering was more of a “decompression chamber” after working long hours and being “called every name in the book” by anti-tobacco activists.

“We’re not going to crack open champagne and smoke cigars,” he said. “It was a job we had to do.”

Jeff Mapes, Wade Nkrumah and Harry Esteve of The Oregonian staff contributed to this report. Reach Janie Har at 503-221-8213;