S.F. Cig Fee a Money-Loser: Put *That* In Your Pipe and Smoke it

Categories: Government, Health
Not cost productive either...
Kudos to SF Appeal's Chris Roberts for scouring the city controller's six-month budget status report and finding an unfiltered nugget on page 22: Somehow, the city has managed to lose millions on its highly touted cigarette fee.

We've written plenty about how this fee was disingenuous, potentially bad policy, and could lead to fees on just about everything. But we never anticipated the city would have to dip into the general fund for $3.4 million as a result of it. Silly us. We forgot what city we live in.

Well, what the hell? How the hell do you lose money by charging heavily for a much-used consumer good? "Well, the program didn't start when it was intended to start because of various things that needed to be done to set it up with the Department of the Environment and treasurer," explains Deputy City Controller Monique Zmuda. "And, also, it took longer to approve the program that originally anticipated."

So, while establishing a $4.5 million budget for the cigarette fee, the city has, so far, only collected $300,000 from around a third of the retailers the tax man has hit up. The city figures it'll make enough money that it will only lose $3.4 million on the program, which will be bled from the general fund.

"What we're doing this fiscal year is absorbing the loss in anticipation the entire $5 million will become a recurring revenue. And we'll know more by the end of the fiscal year," says Zmuda. They may, however, have to "reduce the revenue estimate for next year."

It warrants mentioning that the street-cleaning services the cigarette fee was intended to subsidize were paid for out of the city's general fund in the past. But this is not a case of nothing ventured, nothing gained. The city's bean-counters anticipated that this money would be freed up for other things, thanks to dough showering in via the fee. It hasn't. And now the city has to dip into the general fund again.

Perhaps you could say that, when it comes to money, this city smokes it if it's got it. And even if it doesn't.

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