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Election Likely To Hand Budget Writers $330 Million, Mostly For Medicaid

The revenue is projected to stem from the passage of Measure 108, which raises tobacco taxes and creates a new tax on vaping products.
Vaping appears to be on the rise. | KRISTIAN FODEN-VENCIL/OPB
November 5, 2020

Oregon lawmakers will see some relief when they set the next budget amid a pandemic and unpredictable economic conditions.

Nearly 67% of voters on Tuesday approved Measure 108, which will give Oregon an extra $331 million in revenue from taxes on tobacco and vaping products from 2021 to 2023. Almost all the money -- 90% -- will go toward the state’s Medicaid program and the rest will fund programs to prevent or stop the use of tobacco and vaping products. The revenue comes at a time when state lawmakers are facing economic headwinds as they prepare to meet in 2021 and set the state’s next two-year budget. Oregon continues to face high unemployment and slower business revenues due to the pandemic.

Meanwhile, Oregon budget planners have no promise of aid from Washington, D.C. Congress and President Donald Trump have been unable to reach an agreement on another round of funding to offset the COVID-19 downturn. The presidential race remains uncalled, and the U.S. Senate could remain in Republican hands even if former Vice President Joe Biden wins the presidency. 

“Having some of our own money is going to be critical,” said Rep. Rob Nosse, D-Portland, who serves on the Joint Interim Committee on Ways and Means, which sets the budget. “We need our own source of money if the federal government's not going to come through."

About 1.2 million Oregonians are on Medicaid, which serves low-income people without insurance. The Oregon Health Authority administers Medicaid. The $331 million in new revenue represents less than 10% of what the agency wants in total state funding for programs in its next budget: $3.8 billion. Overall, the authority’s proposed budget is $26.3 billion, which includes federal matching funds. 

Elisabeth Shepard, campaign manager for the ballot measure, said the pandemic underscores the need for access to health care.

“This measure is more critical than ever, and it’s going to be a huge investment to the Oregon Health Plan,” Shepard said. 

The measure raises the tax on cigarettes by $2 per pack, making the total state tax $3.33. The measure also raises to $1 the 50-cent cap on the tax for each cigar.

The measure also creates a 65% wholesale tax on nicotine inhalants, including vaping products and e-cigarettes which have not been taxed. 

The measure is aimed at reducing smoking and vaping rates in Oregon, especially among youth. Though the measure exempts marijuana vaping products, vaping appears to be on the rise. Youth vaping of marijuana, for example,  increased from 11% to 44% among 11th-graders using marijuana between 2017 and 2019, according to an Oregon Health Authority survey. Meanwhile, marijuana use has held steady at about 20% during that time frame. 

The measure goes into effect Jan. 1.  The Oregon Health Authority will be in charge of distributing the program money to communities and organizations such as tribal health providers and regional and local public health programs. The measure allows the authority to take into account the local needs of communities and groups that seek funding, including smoking rates. 

Supporters included public health groups like the American Heart Association and the Oregon Association of Hospitals & Health Care Systems, hospitals and health care providers throughout the state.  Hospitals were major backers of the measure, putting about $7 million into the campaign. 

You can reach Ben Botkin at [email protected] or via Twitter @BenBotkin1.