Appropriations committee approves cut to tobacco-prevention fund to free $3 million for general fund

The House Appropriations Committee voted to give Senate Bill 54 a do-pass recommendation after hearing competing testimony over the bill’s plan to reduce the annual allocation to the Tobacco Prevention and Reduction Trust Fund from $5 million to $2 million. The change would direct an additional $3 million into the state general fund.

Proponents, including Jim Terwilliger of the Bureau of Finance and Management, told the committee the transfer is intended to help cover mandatory increases in Medicaid and costs associated with Medicaid expansion. Terwilliger described the proposed change as one of several revenue adjustments intended to “address all the cost increases we’re seeing this year on the general fund side, primarily related to healthcare and Medicaid and Medicaid expansion.” He said the bill would leave $2 million in the prevention fund plus an expected $1 million in federal funding, “for a total of $3,000,000 that’ll still be spent on tobacco cessation products.”

Opponents, led by Jennifer Staley of the American Cancer Society Cancer Action Network, urged the committee not to cut the voter-approved prevention program. Staley recounted the fund’s origins and the multi-organization effort that placed the $1-per-pack tobacco tax and the dedicated prevention allocation on the 2006 ballot. She said the $5 million prevention program helped drive large declines in smoking and argued the program still offsets far greater Medicaid costs caused by tobacco and nicotine products. “Now is not the time to take our foot off the gas and spend less on a program that’s proven itself effective,” Staley told the committee.

Melissa Magstad, South Dakota’s secretary of health, answered questions about current program priorities and federal support. Magstad said the state receives roughly $1 million per year in federal tobacco-prevention funds and that the Department of Health will shift the quit-line medication cost burden to Medicaid where appropriate. She also noted recent declines in youth vaping in state data: “Our middle school vaping rates have dropped from 6 and a half to 3 and a half percent,” and “our high school… from 24 percent down to 14 percent.”

Committee members pressed for details on how the Department of Health would sustain services if the state-funded portion was reduced. Magstad said the department would prioritize “mission critical programs” and explore options such as using Medicaid to cover quit-line medications rather than paying those costs from the prevention fund.

Representative Casson moved a do-pass recommendation for SB 54; Representative May seconded. The recorded vote was 7 yeas, 1 nay, 1 excused; the committee’s motion to send the bill forward carried.

The bill would change how cigarette and other tobacco-product tax receipts are distributed under state law by lowering the dedicated trust-fund allocation. Supporters framed the change as a modest, ongoing revenue source for the general fund in a tight budget year; opponents warned it would weaken a long-standing, voter-approved prevention program and could reduce proven cessation services.

The bill now moves to the next steps in the legislative process.