Arizona’s shift from cigarettes to vaping is costing early childhood programs millions

PHOENIX — Arizona’s early childhood programs are losing tens of millions of dollars in funding each year, not because voters changed their minds, but because a tax law written in 2006 never anticipated the rise of vaping.

A voter-approved tobacco tax funds a wide range of programs through First Things First, a voter-created state agency, from speech therapy and early literacy support to childcare scholarships and developmental health screenings. But as traditional cigarette use has declined and nicotine consumers have migrated to vaping products, the revenue generated by that tax has fallen sharply. The agency is now operating with roughly $80 million less annually than projected.

“Today, we are operating with about 80 million dollars less in revenue,” said Joe Barba, Senior Director of Government Affairs for First Things First. “And that’s going to substantially change the way that you operate.”

The result: fewer families being served at a critical window of child development.

“From birth to 5, 90% of the brain growth happens within that window,” Barba said. “It’s the time that we should be focusing on the child’s life the most.” 

Arizona voters approved the tobacco tax in 2006 to fund early childhood programs. At the time, e-cigarettes and vaping devices had little to no commercial presence in the U.S. market. When those products emerged and grew rapidly they were never added to the tax structure.

“Vapor and nicotine products entered the market after the original voter initiative,” Barba said, “so they weren’t included.”

The scale of the missed revenue is significant. An analysis by ASU’s Seidman Research Institute, conducted on behalf of First Things First, found that if vaping products had been included in the original ballot language in 2006, they would have generated an estimated $1.6 billion in additional tax revenue since then.

Teen vaping rates are now approximately five times higher than teen smoking rates, and outpace adult use in both categories according to the most recent data available, further widening the gap between nicotine use and taxable tobacco consumption.

The revenue decline is not theoretical. First Things First has already begun reducing the number of programs it funds across Arizona.

“We’ve had to reduce the amount of programs that are funded,” Barba said. “That means less children being served.”

Barba said the impact will be felt most acutely by vulnerable families with limited access to private alternatives.

“There are going to be families that won’t have the same opportunities,” he said.

First Things First and its advocates are calling on the Arizona Legislature to apply the same point-of-sale tax to vaping and nicotine products that currently applies to traditional tobacco. Importantly, the tax would only apply to purchasers of those products and not a broader tax increase.

“We’re looking to take a very fiscally responsible and common-sense approach,” Barba said, “to close the loophole and modernize our tax structure.”

That proposal has stalled at the legislature. Advocates say they will continue working to educate lawmakers and the public on the funding gap and its consequences for Arizona children.

“That investment starts with our youngest Arizona citizens,” Barba said.

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