After Prop 10 passed in 1998, California became one of the first states to raise taxes on cigarettes to fund early education programs. A new agency, First Five California, was created to hand out the money to schools and nonprofits to run education and health programs for children under five.

Scott Moore, a political analyst with Early Edge California, a nonprofit that advocates for increased early education, said California’s experience shows that the president’s plan to increase tobacco taxes to fund universal preschool can provide two returns on the investment.

“You get the return from investing in young kids,” Moore said, “and you get the return in reduced healthcare costs from reduction in smoking.”

According to First 5 California’s most recent report, more than 160,000 children under  6 years old received child development services such as free preschool last year. Moore said the state has become a leader in early education services for low-income families, calling California an “innovation engine” for early childhood services.

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Cheyenne International LLC of Grover, N.C., and Xcaliber International LTD LLC of Pryor, Okla., each gave $200,000 this month to the fight against the proposal, according to reports filed with the Missouri Ethics Commission.

The tobacco tax increase, which has been labeled Proposition B, would generate at least $284 million for public schools, state colleges and universities, and smoking cessation programs.

Proponents say the proposal also would save the state money by reducing long-term health costs linked to smoking.

Missouri currently has the lowest cigarette tax in the country — 17 cents per pack. Proposition B, which was placed on the ballot by an initiative petition drive, would raise it by 73 cents per pack.

Because of the way the proposal is written, the impact would be even greater on cigarettes made by smaller tobacco companies, such as Cheyenne and Xcaliber.

Companies that didn’t participate in the national tobacco settlement in 1998 currently can sell cheaper cigarettes in Missouri than major manufacturers, such as R.J. Reynolds Tobacco Co., can.

The larger companies pay the state about $150 million a year under the settlement, to help cover diseases caused by smoking.

Companies that didn’t sign the settlement pay a portion of their revenue into a state escrow fund, but they have been allowed to recoup their money at the end of each year.

The ballot proposal would eliminate that advantage.

As a result, the off-brands could face an additional cost of 57 cents per pack, on top of the 73-cent tax increase, said Ron Leone, executive director of the Missouri Petroleum & Convenience Store Association.

“That’s why they have even more skin in the game,” Leone said.

The association’s PAC is running the opponents’ campaign. Their ads will focus on “this outrageous and unfair 760 percent tax increase,” Leone said, citing the impact on the smaller companies’ brands.

The ballot proposal also would impose smaller tax hikes on other tobacco products, such as cigars.

The opponents’ campaign had $116,694 in the bank on July 26, before the recent surge.

Though Big Tobacco’s money is noticeably absent so far, retailers are helping out. For example, U-Gas Inc. of Fenton, Mo., recently chipped in $50,000 while Dallas-based 7-Eleven Inc. added $25,000.

Missourians for Health and Education, the committee campaigning for the proposal, has already spent $1 million on the initiative and had $126,452 in the bank, at last report.

The American Cancer Society, which has provided much of proponents’ funding, added $11,564 this week. Other big checks came from World Wide Technology Holding Co., Inc. of St. Louis, which kicked in $25,000, and Gray Ritter & Graham, a St. Louis law firm, which contributed $10,000.

By Virginia Young St. Louis Post-Dispatch

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