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Cigarette smuggling becomes a big problem in Minnesota

REUTERS/Alex Grimm

What? Smoke smuggling?  In the Strib, Ricardo Lopez writes, “Less than two years after Minnesota raised its cigarette tax to one of the highest in the country, cigarette smuggling has become a growing business in the state. Now officials want more money to combat the problem. Minnesota Department of Revenue officials seized or assessed untaxed tobacco products in more than 40 percent of the 374 retail inspections conducted through the first three quarters of last year. Before the cigarette tax jumped $1.60 per pack, or 130 percent, retail inspections found untaxed tobacco products only 8 percent of the time.”

The OK is in ink. Stribber Jim Buchta says, “A neighborhood task force approved plans for a high-rise apartment tower that would replace the Nye’s Polonaise Room in Minneapolis despite the objections of its neighbor, a historic church on the same block. The latest plans call for 189 rental apartments in a 30-story tower that would sit atop one level of underground parking, five levels of above-grade parking and ground-floor retail space. … Two of the most historic Nye’s buildings would be preserved and the other two demolished. The oldest building on the site, the three-story ‘Harness Shop’ building at 116 E. Hennepin Av., was built in 1905 and would be moved about 30 feet to the west and would abut a building at 112 E. Hennepin. A portion of the Harness Shop building would be demolished.”

Clearly in need of a radical makeover. The AP story says, “Minnesota tax collections for January ran $85 million ahead of projections, which is likely to feed expectations of an enlarged budget surplus in a report coming later this month. The extra collections documented Tuesday were 4.3 percent more than state finance officials had expected.”

Simultaneously: Abby Simons of the Strib reports, “Minnesota’s 30,000 families in need are decades overdue for a bump in monthly assistance through the state’s welfare to work program, and millions should be reallocated to pay for that boost, according to a report by a  legislative task force released this week. The State’s Temporary Assistance for Needy Families (TANF) task force revealed that the state’s fund for families in need, otherwise known as the Minnesota Family Investment Program (MFIP), has not increased its monthly allocations to families — $532 — since 1986. That’s despite a $260 million grant to fund the state’s workforce development program, which over the years has been diverted to other priorities.”

As the debate about teacher licensing and lay-off policies gets into its formal phase, Christopher Magan at the PiPress says, “The changes have the support of Republicans, school administrators and education-reform advocates who say the current system keeps qualified teachers out of the classroom. … [A bill by Rep. Jenifer Loon, R-Eden Prairie,] would make it easier for teachers from other states to get licensed and give schools administrators more freedom to hire ‘community experts’ who otherwise would not have the proper credentials to become a teacher.”

The Met Council’s study on streetcars didn’t exactly produce a ringing endorsement. Says Frederick Melo in the PiPress, “The study scheduled to be presented to the Metropolitan Council on Wednesday describes streetcar projects as pricey economic development tools with debatable results. More than half the case studies cited, however, involve streetcar corridors that had yet to roll out at the time the report was authored.”

A stationary bubble is better than one that bursts. Tom Meersman of the Strib says, “In the richest and most expensive farm property across southern Minnesota, the land market is changing. Several years of double-digit price increases have come to an end — and it may stay that way, experts say. Sales data from 2014 show that while the median price of farms statewide increased by 5.1 percent, it’s a different story in specific areas. Ag land prices in southwest Minnesota dropped by 8 percent last year compared with 2013 and were virtually unchanged in south central and southeastern counties.”

Citigroup exec (and former head of the OMB) Peter Orszag has a column at Bloomberg News talking about our neighbor Gov. Walker’s plans to nibble at a hefty $2 billion budget deficit with, among many other things, $300 million in cuts to the University of Wisconsin system. “Walker’s proposal provides a stark example of a broader trend that has been too little noticed: In the past three decades, many states have cut their appropriations for higher education, drastically eroding the quality of public universities. As Tom Kane of Harvard and I have shown, states have tended to reduce higher education spending during economic downturns, but then have not restored the money during recoveries. The cumulative effect of this downward ratcheting has been enormous.”

I’m certain he’ll be a better dad after this. Says Brian Murphy at the PiPress, “Adrian Peterson is working in Minnesota to maintain joint custody of his 4-year-old son and fulfill NFL Commissioner Roger Goodell’s conditions for reinstatement. As he waits for a federal judge to rule on his NFL suspension, the Vikings’ all-time leading rusher continues four months of psychological counseling and parenting supervision in Hennepin County, according to juvenile court records.”

Comments (6)

  1. Submitted by Thomas Swift on 02/11/2015 - 08:35 am.

    “Cigarette smuggling becomes a big problem in Minnesota”

    Ninja problem; never saw it coming.

    • Submitted by jason myron on 02/11/2015 - 01:01 pm.

      South Carolina…

      Annual health care costs in South Carolina directly caused by smoking $1.9 billion
      Portion covered by the state Medicaid program $476 million
      Residents’ state & federal tax burden from smoking-caused government expenditures $973 per household
      Smoking-caused productivity losses in South Carolina $2.35 billion
      Adults who die each year from their own smoking 7,200
      Kids now under 18 and alive in South Carolina who will ultimately die prematurely from smoking 103,000

      Thanks, but we’ll take the smuggling problem up here.

  2. Submitted by Robert Moffitt on 02/11/2015 - 08:44 am.

    Smuggle this…

    Almost as an afterthought, the Strib story on cigarette smuggling notes that smoking rates in MN have plummeted.

  3. Submitted by Nathaniel Finch on 02/11/2015 - 10:09 am.

    Smoke smuggling

    The cigarette smoking story didn’t say a word about who is doing the smuggling and how the smuggled cigarettes are being sold and by whom. Is there an organized business that smuggles the cigarettes and wholesales them to retailers? Are the retailers aware that the cigarettes are smuggled? What are the mechanics of this trade? I’d like to know more about that. Pretty big omissions in this story.

  4. Submitted by Dennis Tester on 02/11/2015 - 10:10 am.

    “cigarette tax jumped $1.60 per pack, or 130 percent”

    There’s an economics lesson here for anyone interested in how the world works.

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