ABC-7 Fact Check Transcript

KGO - A hotly contested ballot proposition has pitted hospitals against tobacco companies. The tobacco companies are outspending hospitals to defeat Proposition 86 -- that's the measure that would triple the tax on cigarettes.

$2.60 per pack -- that will be the additional tax on cigarettes if Proposition 86 passes. It's expected to raise $2 billion dollars a year and raise the price of a pack of cigarettes to near $7 dollars.

Ted Lempert, supports 86: "It's going to reduce teenage smoking in half and it funds some critical health programs including making sure every child has access to health insurance."

Supporters of the proposition say the $2 billion dollars a year in taxes will fund health insurance for children and pay hospitals to keep their emergency rooms and trauma centers open.

Ted Lempert, supports 86: "And quite frankly that's why public health groups are supporting it because we need to keep these emergency rooms open."

Opponents complain the tax places an unfair burden on smokers and gives hospitals a windfall.

John R. Graham, opposes 86: "What Proposition 86 actually does, is it gives a river of cash to the hospitals for which they are completely unaccountable."

It's true hospitals would get about half of the $2 billion dollars raised by the tax -- most of it for E.R. and trauma costs. But it's not true that they're completely unaccountable.

The proposition spells out all programs and departments receiving moneys from the tobacco tax of 2006 trust fund are subject to audits by the Bureau of State Audits.

Critics of Proposition 86 point to a provision that allows hospitals in the same region to reach agreements on keeping open an emergency room or a trauma center. Opponents say that violates anti-trust protections.

But any agreements between hospitals would have to be approved and monitored by the local authorities, like the county supervisors or the city council. When we brought that up to the spokesman for No on 86, he said local government can't be trusted.

John R. Graham, opposes 86: "There's a clock tower run by the San Francisco Port Commission. Four faces of the clock and none of them tell the same time. They can't even manage the clock face. How are they going to manage the complxity of the hospital?"

ABC7's Mark Matthews: "Well they manage fire departments and police departments and a good deal more. Do you really think the clock analogy is a good one?"

John R. Graham, opposes 86: "I think it's a very good one. The rules already governing hospitals in this state are massive and voluminous and they generally mess things up."

That assessment is undercut by a national report card by the American College of Emergency Physicians, rating California hospitals overall the best in the country -- except for the number of emergency departments, where the state ranked dead last.

Ted Lempert, supports 86: "California's tobacco tax is below the national average right now and if you want to do something to really save lives and reduce smoking, this is the way to do it."

Proponents point to a state Department of Health Services study that says the tax would prevent 700,000 teenagers from taking up the habit and they scoff at opponents' claims it will lead to cigarette smuggling.

Ted Lempert, supports 86: "Bottom line is the tobacco tax is very high in Chicago and New York and the smuggling issue has not been apparent at all."

That's not true. After Chicago raised its cigarette tax, sales dropped off. California isn't in the same situation in that the tax would be statewide. Still, smokers could go to Indian casinos or online to buy cigarettes without the tax. But supporters say people will continue to buy them at stores and pay the tax.

Ted Lempert, supports 86: "Most folks who smoke think they're going to quit so they buy a pack at a time, a pack at a time and that's the way most folks buy cigarettes."

Prop. 86 would burden smokers with a stiff tax. A pack a day habit will mean an extra $800 dollars a year.

On the other side, the tax will reduce the number of people who smoke and the number of teenagers who will start. Next week, California voters will make their choice.