South Dakota tobacco tax shift burns up mosquito control money for cities, counties

A move to put more tobacco tax money toward South Dakota's day-to-day government expenses might mean more mosquito bites — and a greater risk of West Nile virus — after July.
Gov. Larry Rhoden signed Senate Bill 54 into law on Friday. It reduces the amount of yearly tobacco tax revenue used to help people quit and avoid smoking from $5 million to $2 million. The rest of the money raised annually by the tax — more than $40 million, typically — goes to the state's general fund.
Backers of the bill said smoking rates have dropped, the need for prevention is lower, and the state needs the money to pay for its expanded Medicaid program. Opponents called the move foolish, citing spikes in the use of nicotine vape products as a blind spot in tobacco prevention that could cause public health trouble down the road.
One piece of the tobacco tax change didn't get much attention, though.
For the past 10 years, South Dakota has funneled a half-million dollars of the sin tax bounty it collects annually from tobacco users into mosquito control grants for cities and counties.
Those grants, cities and counties learned last week, won't be available for the next fiscal year, which starts July 1.
The goal of the grant program was to reduce the risk of West Nile virus, the most severe version of which can be deadly. Fifty-four South Dakotans have died from West Nile since 1999.
The loss of the grant money could impact smaller communities more than larger ones. Joe Kippley, public health director for the city of Sioux Falls, said his department anticipated the loss and has budgeted to continue mosquito spraying.
In smaller towns, the loss of grant funding could be a little harder to replace.
After this summer, 'we're not sure what will happen,' Viborg Finance Officer Brandy Skonhovd said.
The story of how cigarette dollars turned into insecticide grants begins in 2006.
That's the year voters passed Initiated Measure 2, which slapped an additional $1-per-pack tax on cigarettes and an extra 25% tax on other forms of tobacco on top of the state's existing tobacco taxes.
The first $30 million of tax revenue generated as a result went to the state's general fund, the measure specified, after which $5 million would be put in the Tobacco Prevention and Reduction Trust Fund and used for anti-smoking programming.
Tax collections beyond $35 million would split between the Property Tax Reduction Fund, the Education Enhancement Tobacco Trust Fund and the Health Care Tobacco Trust Fund.
That setup had shifted by 2014.
That's the year Doneen Hollingsworth, who was the secretary of the Department of Health, asked lawmakers to sign off on using a half-million dollars from the $5 million anti-smoking fund for mosquito control grants.
The recession of 2007 through 2009 tightened budgets, she said. The state had already begun to dip into that fund to pay for things like childhood immunizations, she told them, and there was a new problem to address in 2014.
The federal money for West Nile monitoring and mosquito control made available to states when the virus first emerged had dried up. Then-Gov. Dennis Daugaard proposed using tobacco tax money that year, Hollingsworth said, 'to address this urgent public health issue' by keeping the grant money flowing to local governments.
That wouldn't break the law, Hollingsworth assured the Legislature's Joint Appropriations Committee.
The state, in 2014 and today, gets about a million anti-smoking dollars a year from the federal government. As long as that money is available, she said, the state could skim up to a million prevention trust fund dollars off the top and still meet voters' expectations.
'We've always spent at least $5 million on tobacco prevention and control,' she said.
Since then, the state has spent about $5 million from the fund to control mosquitoes. Grant awards, used for chemicals or the equipment needed to spray it, are tied to the prevalence and risk of West Nile in local communities.
During debate on this year's legislative Senate Bill 54, Bureau of Finance and Management Commissioner Jim Terwilliger told lawmakers it never made much sense to tie the grants to tobacco funding.
'That's an example of the different things that I think can go away, and we could be smarter with these funds,' the commissioner told the Senate Appropriations Committee in February, during his pitch for reducing the amount of tobacco tax money the state spends on anti-smoking programs.
Terwilliger rattled off statistics on lower smoking rates among teens and adults in the years since voters passed the tobacco tax, too, and said South Dakota spends more on anti-tobacco programming than other states.
Jennifer Stalley, Midwest policy director for the American Cancer Society Cancer Action Network, was on hand to refute Terwilliger point-by-point in her opposition testimony.
But she and Terwilliger saw eye to eye on one thing.
'I would tell you that I don't think that fits within the letter of the law,' Stalley said of the use of tobacco money for mosquito control.
Lawmakers' passage of SB 54 put an end to the $500,000 carve-out for West Nile, and appropriators didn't supplement the state budget with any replacement funds to keep the grants going.
Tia Kafka, spokeswoman for the state Department of Health, said the state will continue parts of its West Nile virus programming. That includes federally funded risk prediction modeling and a federally funded epidemiologist to serve as the program's overseer.
Also continued will be the state's West Nile Virus dashboard, which shows modeled risk and the mapped results of the mosquito collection efforts that attempt to catalog the prevalence of the mosquito species that spread the virus.
'However, very limited mosquito testing will occur in 2025, and the program's sustainability beyond that year is uncertain,' Kafka said.
Virus modeling predicted 60 cases for 2024; the dashboard lists 21 total West Nile cases and one death from the disease. The Health Department's website does not show a prediction for 2025.
It costs Viborg around $2,500 to buy the insecticide used to reduce West Nile risk, according to Skonhovd, the city finance officer. The city got $8,000 last year, though, to pay for new equipment.
The spraying in and around the southeast South Dakota town of 834 starts in May and continues into the fall.
'When we have football games, we try to keep the mosquito population down for those,' Skonhovd said.
Paul Kosel runs the mosquito control program for Groton, population 1,355. Kosel is also the newspaper publisher and information technology supervisor for the community, bordered by wetlands on the eastern side of Brown County. That county has long been the state's most reliably risky for West Nile in the two-plus decades the disease has been endemic in South Dakota.
'Trying to do mosquito control in Groton is a living nightmare because we're surrounded by water,' Kosel said.
Kosel and Skonhovd both say they feel confident they'll be able to pay for this year's work with the money that's available until July 1, when the tobacco-funded grant spigot turns off with the end of the state's fiscal year.
After that, they both hope the state finds a way to keep things going. Insecticide and equipment can be a strain on a small-town budget.
'It's not cheap, that's for sure,' Kosel said.
Larger cities could have an easier time. Joe Kippley, public health director for the city of Sioux Falls, set aside $750,000 for mosquito control this summer. Last year, the city received $20,000 from the state for spraying, but Kippley said the city knew the money would go away this year, and that it had previously set its budget up to withstand the expense of spraying with or without state help.
'We do not budget for these grant dollars annually because they are distributed through an application process and are therefore not guaranteed each year,' Kippley said in an emailed statement. 'The discontinuation of this funding will not impact the city's mosquito control program and services.'
This article originally appeared on Sioux Falls Argus Leader: Tobacco tax shift burns up mosquito control money for cities, counties

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