Smokin’ Mirrors: Shumlin’s $116,000 E-Cigarette Lesson

Among the few new taxes to win the Vermont House’s seal of approval last month was a pair targeting popular tobacco products.

One would raise roughly $700,000 by taxing snuff and smokeless tobacco at a rate comparable to cigarettes. Another would raise $500,000 by creating a new, 92 percent tax on electronic cigarettes, a nicotine-based product used to simulate smoking.

Gov. Peter Shumlin doesn’t think much of the proposals — and he’s hoping the Senate will, in its infinite wisdom, plot a different course as it finalizes its own tax bill in the coming weeks.

The gov’s stance isn’t surprising, because he has consistently opposed most new sales and excise taxes. What is surprising is that, in explaining his position, Shumlin argues that there are potential health benefits to e-cigarettes — a claim not widely accepted by the public health community.

“My own view on e-cigarettes is that we should be cautious about taxing a product that we think might be gettin’ some folks off of tobacco,” he said at a recent press conference. “So, you know, I’m willing to listen, but my own nonscientific research has found folks who are able to finally get off tobacco products because they’re using e-cigarettes. I think the verdict’s still out on them.”

The verdict may still be out, but plenty of jurors seem to think e-cigarettes are guilty.

The World Health Organization, for one, said last year that “consumers should be strongly advised not to use” e-cigarettes. The Centers for Disease Control and Prevention, meanwhile, found that e-cig use by middle and high school students doubled from 2011 to 2012, and calls to poison control centers — often involving young children — have skyrocketed.

Closer to home, Shumlin’s own Vermont Department of Health appears to disagree with the conclusions of the governor’s “nonscientific research.”

“The health department supports using proven [smoking] cessation methods, which e-cigarettes are not,” says Rhonda Williams, acting director of the department’s Division of Health Promotion and Disease Prevention.

According to Williams, the state believes e-cigarettes contribute to youths taking up tobacco, and she says higher excise taxes have been shown to reduce traditional cigarette use among adults and young people.

“While it’s still early to say whether levying taxes on e-cigarettes will decrease their use, there is acknowledgment that it will likely discourage use, especially among price-sensitive youth,” she says.

But asked about the body of research contradicting his opinion, Shumlin said at the presser, “All I can tell you is that, anecdotally, I’ve spoken to folks who don’t feel that way. This is a new product, a relatively new product. I’m not sure that the first thing we should do is tax it out of existence.”

“Even though it comes in flavors that appeal to children, like strawberry?” VTDigger’s Anne Galloway asked.

“So does candy,” Shumlin responded.

Which, um, was an interesting thing to say.

Asked if he’d discussed the matter with any lobbyists, the gov said, “No. Not that I can recall.”

Then he stopped himself and clarified: “I have not met with any lobbyists in Vermont on this subject. We did have an education presentation on e-cigarettes at something I was at about how they’re made, what’s in ’em, who sells ’em. But I have not met with any lobbyists on this tax question in Vermont.”

Pressed on the nature of the “education presentation,” Shumlin said he believed it took place at a meeting of the National Governors Association or the Democratic Governors Association.

“I’ll get back to you on who it was,” he said. “I just don’t remember it that well. It was the last couple of years. I’ll find out. It’s the only education I’ve got about who’s making them, what they do, what’s in them.”

Sure enough, Shumlin’s staff got back to us. Turns out the presentation went down just six weeks earlier, during a Washington, D.C., breakfast meeting hosted by the DGA. Shumlin, you might recall, serves as chairman of the organization.

And who presented all that e-cigarette educatin’? Reynolds American, Inc., the second-largest tobacco company in the U.S. — and a major player in the $2 billion-and-growing industry.

How did Reynolds get an audience with the nation’s Democratic governors? A DGA spokesman didn’t respond to a request for comment, but here’s one possibility: cash money.

According to the DGA’s latest tax filing, Reynolds ponied up $15,000 to the organization just two days after that February “education presentation.” In total, Reynolds gave the DGA nearly $116,000 in the first quarter of the year. Rival e-cig purveyor Altria Client Services — the company formerly known as Philip Morris — dropped $25,000. Last year, during Shumlin’s first term as chairman, Reynolds and Altria gave the DGA $125,000 apiece.

The industry has also given generously to Vermont politicians directly — and to political action committees run by Democratic and Republican legislative leaders. Last election cycle, Philip Morris gave $5,850 to 11 Vermont candidates, according to VTDigger’s campaign finance database, including a $3,000 donation to Shumlin. RAI gave the gov $2,000.

It’s not exactly breaking news that the DGA relies upon unlimited contributions from its corporate and union members to support Democratic candidates for governor. Nor is it news that many of the DGA’s donors have plenty of business before the State of Vermont.

In the past three months, for instance, the state’s prison contractor, CCA of Tennessee, gave $50,000 to the DGA. CGI Technologies and Solutions, which designed Vermont’s much-maligned health insurance exchange, gave $5,000 in March. (Last year, it gave $110,000.) The American Chemistry Council, which is currently fighting new toxic chemical regulations approved by the Vermont Senate, gave $25,000 late last month.

When asked about his frequent trips to the DGA’s far-flung conferences, Shumlin typically argues that the connections he makes and the policy he discusses there benefit Vermonters. But if he’s really just hob-knobbing with tobacco company execs and digesting junk science at industry-sponsored “education presentations,” that doesn’t quite seem like a win.

Will Shumlin end up signing a tax bill upping the price of e-cigarettes?

$116,000 in tobacco cash says he won’t.

A Scheuer Thing?

Should a new survey conducted by the Castleton Polling Institute give Shumlin’s political advisers pause — or ease their anxieties?

Commissioned by VTDigger, the poll found that 49 percent of the 682 people queried “approve of the job Peter Shumlin is doing as governor of Vermont,” while 40 percent disapprove. The remaining 11 percent said they weren’t sure or wouldn’t say. (The poll’s margin of error was plus or minus 4 percent.)

That’s a dramatic departure from the last time Castleton polled the question, nearly two years ago.

Then, a full 65 percent approved of the gov’s job performance, while only 23 percent disapproved (12 percent said they weren’t sure). Of course, that May 2012 poll came just 17 months into Shumlin’s gubernatorial tenure, when he was still riding high from a remarkable performance responding to the devastation of Tropical Storm Irene.

Since publicly released polling is so rare in Vermont, it’s hard to know how Shumlin’s approval rating has fluctuated in the interim — and why.

What is clear from the poll is that much of the movement can be attributed to independents, who backed Shumlin’s performance 70 to 15 percent two years ago. These days, they’re essentially split, at 44 to 42 percent.

Castleton Polling Institute director Rich Clark says that’s not necessarily cause for concern, since independents are more likely to end up swinging Democratic in Vermont. Then again, in an off-year election featuring no presidential or U.S. Senate races, Vermont’s turnout will be low and unpredictable.

Clark’s takeaway?

“He’s at a spot where he certainly doesn’t look invincible, but he’s not somebody who looks like he’ll be limping toward November,” he says.

That’s not the way Rep. Heidi Scheuermann (R-Stowe) sees it.

“His approval rating is below 50 percent, so that shows that people are looking for something different or are open to something different,” says the four-term rep, who has been publicly mulling a run against Shumlin for weeks. “That alone shows what I’ve said all along: that the governor is vulnerable, he is beatable and that Vermonters want a different direction.”

Scheuermann says she’ll make a final decision when the legislature adjourns early next month. She’s not the only one with that timeline.

The GOP’s 2012 nominee, former state auditor and senator Randy Brock, says he’ll reveal his electoral plans “on or close to the first week of May.” But in a sign that he may end up giving the governor’s race a pass, Brock’s de facto 2012 campaign manager, Darcie Johnston, recently relocated to Arizona to work on Republican gubernatorial candidate Frank Riggs‘ campaign. She’s continuing to lead Vermonters for Health Care Freedom, which opposes Shumlin’s health policies.

Meanwhile, the on-again-off-again buzz around Montpelier that retired investment banker and Campaign for Vermont founder Bruce Lisman might run is definitely on again. Lisman recently handed over the CFV reins to former Vermont Public Service Board chairwoman Louise McCarren, which could free him up for a run.

According to Brock, he and Lisman have discussed the gubernatorial race “in general terms” over the phone and over coffee in recent months.

“He’s probably even more circumspect than I am, so I don’t know what Bruce is going to do, if anything,” Brock says, adding that Lisman might even run as an independent. “He has said for a long time that he was not going to run, but I don’t know if that was a firm commitment.”

Lisman did not respond to a request for comment.

In a sign that Democrats might have Lisman on the brain, the Vermont Democratic Party last week issued an unusual press release attacking Campaign for Vermont, which calls itself a nonpartisan advocacy group.

The party’s complaint? That CFV used social media channels to circulate an economic study conducted by the American Legislative Exchange Council, an industry-funded think tank that pushes conservative, free-market principles on state legislatures. Many cite ALEC’s advocacy for Florida’s stand-your-ground gun law as a contributing factor to the 2012 death of Trayvon Martin.

In the Democrats’ press release, party spokesman Ben Sarle wrote that CFV’s promotion of the ALEC study shows that the group’s “nonpartisan label is totally bogus.”

“They call themselves nonpartisan, but the veil is thin, as far as their Republican agenda,” Sarle said in an interview, calling the report “just total BS.”

Guilt by association? If so, here’s another connection for you: CFV’s and Lisman’s longtime spokeswoman and consultant, Montpelier lobbyist Shawn Shouldice, serves as ALEC’s private-sector state chairwoman.

She, too, couldn’t be reached for comment. Cyrus Patten, CFV’s newly minted executive director, says his group is not affiliated with ALEC and was simply sharing a report it had stumbled upon. He doesn’t think much of the Democratic party’s release.

“It was partisan rhetoric meant to rile people up,” Patten says.

Or, perhaps, it was a warning shot directed at Lisman.

This article appears in The Food Issue 2014.

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