The Economic Consequences of the Recent Cigarette Tax Increase

In Minnesota

By
John Dunham and Associates
Brooklyn, New York
Orzechowski & Walker
Arlington, Virginia
June 13, 2014

Funded by Altria Client Services Inc. (on behalf of Philip Morris USA, U.S. Smokeless Tobacco Company
and John Middleton), RAI Services Co., Lorillard Tobacco Co., Minnesota Wholesale Marketers Association,
Kwik Trip, Inc., Holiday Stationstores, Inc., Farner-Bocken Company and Core-Mark International
Supported by The Minnesota Retailers Association and The Minnesota Petroleum Marketers Association

EXECUTIVE SUMMARY
The Economic Consequences of the Recent Cigarette Tax Increase
In Minnesota
The State of Minnesota recently passed a 130 percent increase in the cigarette excise tax. The
excise tax increase has shifted taxable sales to neighboring low-tax jurisdictions, and a provision
that would increase the rate annually would further this disturbing trend Legislation that
discriminates against cigarette sales in draconian ways simply impacts local tobacco retailers and
can have damaging consequences for the Minnesota economy:
Cigarette sales account for nearly 40% of in-store sales for many local retailers. 1
Currently about 6,200 Minnesota retailers sell cigarettes.2 The average store sells 38,000
packs per year. In many cases, profits from cigarettes keep the doors open and allow
store owners to employ local residents.
Border communities are seeing per capita sales losses of 27% to 42%, depending on
the border. Sales losses for Minnesota retailers situated near the Iowa, North Dakota,
South Dakota, and Wisconsin borders have been devastating. Per capita sales in
Minnesota counties bordering North Dakota are now just 13 percent of those in
neighboring communities. Per capita sales in Minnesotas border regions as a whole
have fallen by 30.1 percent in the aftermath of the tax increase; this drop in sales is 50
percent larger than the estimated 19.8 percent reduction statewide.
The cigarette tax increase has put more than 1,100 Minnesotans out of work. In an
economic environment where nearly 141,100 people are trying to find jobs,3 higher
cigarette taxes in Minnesota have already put more than 1,100 people out of work. The
bulk of these jobs are with local retail establishments particularly convenience stores.
These stores employ about 4,810 people due to the sales of cigarettes. Wholesalers
provide another 380 jobs, and firms that supply these businesses about 660 jobs. These
are real people, with real jobs, living in communities throughout the state.
Prior to the tax increase the Tax Foundation estimated that 22.4% of all cigarettes
consumed in Minnesota were purchased from other states, Native American smoke
shops, or other, non-Minnesota sources.4 The tax increase only makes this problem
worse. The combined excise and sales tax rate in the state is now among the highest in
the country, and the evidence shows that this has driven consumers to retail shops in the
bordering states of North and South Dakota. After the tax increase, retailers in Iowa and
Wisconsin saw significant growth in sales at the expense of both Minnesota stores and
taxpayers.
1
2

Wong, Venessa, In Convenience Stores: More Food, Fewer Cigarettes, Bloomberg Businessweek, January
17, 2013. The figure is specific to convenience stores and reflects the national average.
6,200 stores based on in-store scanner data provided by Altria Client Services, Inc. In its fiscal note, the
State of Minnesota estimated that there were about 9,000 retailers. See: Analysis of H.F. 91 (Lenczewski),
As Amended in House Tax Committee, Analysis Revised for February 2013 Forecast, Minnesota
Department of Revenue, March 12, 2013.
Bureau of Labor Statistics, Regional and State Employment and Unemployment Summary, April 2014,
http://www.bls.gov/news.release/laus.nr0.htm.
Henchman, Joseph and Scott Drenkard, Cigarette Taxes and Cigarette Smuggling by State, Fiscal Fact 241,
The Tax Foundation, March 2014.
2

Minnesotas tobacco retailers may have lost as much as $38.46 million in nontobacco sales as a result of the tax. Management Science Associates, Inc., a firm that
collects extensive data from wholesalers and retailers, estimates that on average, for
every $8.33 in cigarettes purchased, buyers purchase $6.87 in non-tobacco products.5
That would suggest that Minnesota retailers have lost as much as $38.46 million in sales
of sundry products things like gasoline, food, beverages, candy, salty snacks, and
lottery tickets due to the tax increase.6
The proposed tax accelerator will only make matters worse, as it will raise taxes by
about 10-cents per pack each and every year. Over time, this perverse tax increase
will cost more and more jobs.

Presentation by Don Burke, Senior Vice President, Management Science Associates, Inc., at the Federation
of Tax Administrators Annual Meeting (Tobacco Tax Section), Albuquerque, New Mexico, August 13,
2013.
An estimated 11.43 million packs were lost to increased purchases in other states. Taking these lost taxpaid sales times an estimated price per pack of $4.08 is equal to $46.63 million. Dividing this by $8.33 and
multiplying by $6.87 provides an estimate of lost sundry sales.
3

The Economic Consequences of the Recent Cigarette Tax Increase

In Minnesota
Introduction
Minnesotas excise tax on cigarettes increased on July 1, 2013, as part of a major package of tax
increases in the state. This legislation, the Minnesota Omnibus Tax Bill, was signed into law on
May 23, 2013.7 The state eliminated the 75-cents per pack health impact fee and raised the
excise tax from 48-cents per pack to $2.83 per pack. The wholesaler fee - levied in lieu of a retail
sales tax - rose as well, going from 36.2-cents per pack to 49.3-cents per pack. In January, that
rate, which is adjusted annually, rose to 51.2 cents per pack. Going forward, the cigarette excise
tax will be subject to annual indexation.
Table 1
Minnesota State Cigarette Tax Rates8

Excise Tax
Health Impact Fee
Wholesale Sales Tax
Retail Sales Tax
TOTAL

Minnesota Tax Rates since Jan. 1, 2013

1/1/2013 - 6/30/2013 7/1/2013 - 12/31/13 1/1/2014 - Current
$0.480
$2.830
$2.830
$0.750
$0.000
$0.000
$0.362
$0.493
$0.512
$0.000
$0.000
$0.000
$1.592
$3.323
$3.342

Combined, the cigarette excise tax and wholesaler fee is $3.342 per pack. 9 The tax increase
makes the overall excise and state sales tax in Minnesota the 7th highest in the country, and
significantly higher than any of the states surrounding it, as well as in the Canadian province of
Ontario.10 Table 2 on the following page compares the tax rate in Minnesota with other states.
This relatively high tax rate encourages consumers to purchase cigarettes as well as other
products from retailers located in:
Lower-tax surrounding states,
7

10

The bill also changed the taxation of little cigars and increased the tax on other tobacco products (OTP)
from 70 percent to 95 percent of wholesale value. Before July 1, 2013, little cigars were taxed as OTP and
subject to the 70 percent rate. They are now taxed like cigarettes. In addition, little cigars weighing more
than 3 lbs. per 1,000 and less than 4.5 lbs. per thousand are taxed at $5.66 per pack. While data on little
cigar sales in Minnesota following the tax increase are not available, it follows that some of the sales now
being recorded as cigarettes actually represent little cigars.
Cigarettes in Minnesota are not subject to the state retail sales tax. Instead, wholesalers pay a tax in lieu of
the sales tax. That rate adjusts annually (on Jan. 1 of each year)
This is the tax rate for cigarettes produced by companies that have signed a Tobacco Settlement Agreement
with the state. Products produced by these firms account for the vast majority of cigarettes sold in the state.
For cigarettes produced by companies without a settlement agreement, a non-settlement fee of 50-cents
per pack is assessed making the total tax rate $3.843 per pack.
The cigarette tax rate in Ontario is equivalent to $2.47 per 20-unit pack. The federal tax in Canada is $1.70
per pack of 20.
4

Non-taxed Native American reservations,

Non-taxed military commissaries and post exchanges,
Duty free shops,
Over the Internet, and
Black market sources.
While in some cases, these sales may be illegal and require the consumer to pay cigarette use
taxes, enforcement can be difficult.11 In addition, Minnesota law allows consumers the ability to
legally evade the tax up to a point.12
Table 2
Comparative State Cigarette and General Excise Taxes Per Pack
State
New York
Rhode Island
Massachusetts
Connecticut
Hawaii
Washington
Minnesota
New Jersey
Vermont
Wisconsin
Dist. Of Columbia
Arizona
Illinois
Maryland
Michigan
Maine
Alaska
Utah
New Mexico
Pennsylvania
New Hampshire
South Dakota
Texas
Iowa
Montana
Florida

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

Combined Sales and

Excise Per Pack
4.75
4.07
3.98
3.92
3.54
3.53
3.34
3.21
3.07
2.88
2.86
2.43
2.41
2.38
2.38
2.32
2.00
1.99
1.98
1.95
1.78
1.76
1.76
1.71
1.70
1.67

Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
14
16
17
18
19
20
21
22
22
24
25
26

State
Delaware
Ohio
Arkansas
Indiana
Oregon
California
Nevada
Kansas
Oklahoma
Mississippi
Colorado
Tennessee
Nebraska
Kentucky
Idaho
South Carolina
West Virginia
Wyoming
North Carolina
North Dakota
Alabama
Georgia
Louisiana
Virginia
Missouri

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

Combined Sales and

Excise Per Pack
1.60
1.56
1.48
1.36
1.31
1.26
1.16
1.11
1.03
1.02
0.99
0.96
0.92
0.89
0.86
0.86
0.83
0.80
0.67
0.66
0.62
0.55
0.55
0.53
0.35

Rank
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
41
43
44
45
46
47
48
48
50
51

More ominously, high cigarette tax rates create a target of opportunity for the organized
smuggling of cigarettes. One of the more common forms of the illicit trade in cigarettes in the
U.S. involves interstate smuggling of cigarettes in bulk from low-tax states to high-states. These
transactions are attractive to criminal enterprises because: Cigarettes are sold legally, which
11

12

A 2009 report prepared for the Minnesota Department of Revenue found that few residents file a cigarette
use form on out-of-state purchases. See Blumenthal, Marsha, Cigarette Tax Evasion in Minnesota, October
18, 2009.
Minnesota law allows a consumer to legally bring into the state up to 200 cigarettes (one carton) per month
from a lower-taxed state provided they are personally carried into Minnesota by the consumer. See 2013
Minnesota Statutes 297F.06 Subd. 3.
5

makes it relatively easy to find supply and to distribute; taxes are a major component of price,
and thus, the wide disparity in tax rates between states creates profit opportunities; and criminal
penalties are relatively modest, especially when compared to the smuggling of other illicit
goods.13 The gross profit potential on a pack of cigarettes purchased in Missouri, where the
combined excise and sale tax is 35-cents per pack, and sold in Minnesota is nearly $3.00 per
pack. For a large van carrying 5,000 cartons, thats a profit of $150,000 on a single trip.
This paper examines the effects of the recent tax increases in terms of overall taxable sales in the
state, and the impact of high cigarette taxes on current and future state revenues. It also
examines how high cigarette taxes have impacted retail employment in the state, particularly
along border areas. It is based on models developed by John Dunham and Associates (JDA) and
Orzechowski & Walker for Altria Client Services, Inc., and Reynolds American Services
Company.
The Economic Impact of Tobacco Sales in Minnesota
Even though Minnesota is not considered a tobacco state, the sale of cigarettes is an important
part of the states economy. Cigarettes are part of the product mix sold by many different types
of retailers, including convenience stores, grocers, gas stations, and of course tobacco outlets.
While cigarettes rarely constitute 100 percent of sales for any given store, they account for a
significant amount of both revenues and profits, and in many cases these small businesses need
these profits in order to keep the doors open and employ local residents. As Figure 1 below
shows, retailers that sell at least some cigarettes are located throughout the entire state.
Figure 1
Retail Cigarette Outlets in Minnesota and Surrounding States

Currently there are over 6,200 stores in the state that sell cigarettes.14 These range from tobacco
only stores, to small neighborhood grocers and newsstands. All told, in Calendar Year 2012,
13

14

U.S. Government Accountability Office, Illicit Tobacco: Various Schemes are Used to Evade Taxes and
Fees, GAO-11-313, March 2011.
Based on in-store scanner data provided by Altria Client Services, Inc. In its fiscal note, the State of
Minnesota estimated that there were about 9,000 retailers. See: Analysis of H.F. 91 (Lenczewski), As
Amended in House Tax Committee, Analysis Revised for February 2013 Forecast, Minnesota Department
of Revenue, March 12, 2013.
6

these stores sold a total of 234.6 million taxed packs of cigarettes, 15 or an average of about
38,000 packs per store, with convenience stores selling the bulk of them.16
Table 3
Economic Impact of Cigarette Sales in Minnesota
Direct
Manufacture
Wholesale
Retail
Supplier
Induced
Total
Taxes
State and Local
Federal

Jobs
5,206
11
380
4,815
660
954
6,820

$
$
$
$
$
$
$

Wages
153,977,534
1,254,971
34,533,966
118,188,598
35,226,234
43,135,754
232,339,521

$
$
$
$
$
$
$

Output
357,521,538
31,322,781
81,493,320
244,705,437
97,801,940
126,228,587
581,552,064

$
$

52,949,725
50,411,337

Since retail employment is directly and linearly correlated with sales, jobs in individual stores
are closely tied to the volume of cigarette sales. Estimates for the percentage of sales in each of
the store types accounted for by cigarettes in Minnesota are available from the US Department of
Commerce.17 These percentages are applied to the number of jobs in each of the 6,200 stores to
calculate an estimate of the number of retail jobs dependent on cigarette sales throughout
Minnesota.
Based on this analysis, prior to the 130 percent cigarette tax increase,18 about 4,800 retail jobs
directly depended on the sale of cigarettes in the State of Minnesota. In addition, the jobs of 380
people depend on cigarette wholesaling operations in the state. An additional 11 people work for
various offices of cigarette manufacturing firms located in Minnesota.19 This means that just
over 5,200 jobs in Minnesota are directly dependent on the sale of cigarettes. These workers
earn approximately $154.0 million in wages and benefits.20
As Table 3 above shows, an additional 660 jobs in firms supplying goods and services to
cigarette retailers, wholesalers and manufacturers in Minnesota are dependent on cigarette sales.

15
16

17

18
19
20

Monthly tax-paid sales data was collected by Orzechowski and Walker from the State of Minnesota.
This is an average across all store types and does not necessarily represent an individual store. For example
a restaurant or tavern selling cigarettes may sell only a few packs a day, while a large convenience store
may sell hundreds. In fact, according to the US Department of Commerce, Bureau of the Census, about
72.6 percent of the cigarettes sold in Minnesota are sold in convenience stores, and cigarette sales represent
19 percent of overall c-store sales. See: Retail Trade: Subject Series - Product Lines: Product Lines
Statistics by Kind of Business for the United States and States: 2007, 2007 Economic Census on American
Fact Finder, at www.census.gov
US Department of Commerce, Bureau of the Census, Census of Retail Trade, Subject Series - Product
Lines: Product Lines Statistics by Kind of Business for the United States and States: 2007, on-line at:
http://factfinder2.census.gov/faces/nav/jsf/pages/searchresults.xhtml?refresh=t
This is the percent change in the excise tax rate only, not including the increase in sales taxes.
Data from Dun and Bradstreets Hoovers database.
Wage per employee figures are based on IMPLAN input-output tables for Minnesota, 2012.
7

A further 950 people have jobs that are induced by the re-spending of the $189 million of wages
of direct and supplier employees.
All told, about 6,800 people have jobs dependent on the sale of cigarettes in Minnesota, and this
creates nearly $581.6 million in economic activity. In addition, as much as $52.95 million in
business and personal taxes are paid to Minnesota and its localities by businesses and individuals
due to the sale of cigarettes. This does not include the nearly $371.7 million in excise taxes paid
to the state by cigarette consumers.
The Impact of the 130 Percent Tax Increase on Jobs and Economic Activity in Minnesota
Since tobacco is taxed at different rates in different states, consumers in a given jurisdiction can
take advantage of a wide range of prices. Not only can consumers in Minnesota purchase
cigarettes from local retailers like convenience stores, grocery stores or tobacco outlets, but they
can also purchase the same exact product from similar stores in neighboring states, or from duty
free stores on ships, in airports or along the Canadian border. Consumers can also order
cigarettes from vendors overseas via the Internet. These vendors typically sell counterfeit
versions of premium brands and use the U.S. mail or private shippers to get them directly to
consumers. Consumers also have access to cigarettes sold in Native American smoke shops
located on one of the 11 reservations in the state, or on military commissaries and post
exchanges. While many of these sales may ultimately avoid payment of appropriate excise
taxes, and residents are required by law to remit these taxes to the Department of Revenue,
widespread tax avoidance is common, either intentionally or unintentionally.
Based on monthly tax-stamp sales data from the Minnesota Department of Revenue, average
sales per month are indeed down by about 4.7 million packs in the 10 months after the tax
increase was imposed. This, however, includes sales of little cigars that, following the tax
increase in July of 2013, are taxed as cigarettes. These little cigars represent a very small part of
the overall tobacco market, and based on data from 2012 probably account for no more than
about 16,500 packs per month, or fewer than 200,000 packs per year.21
Overall, cigarette sales in Minnesota had been trending downward for some time, but even so, if
one includes the estimated little cigars, sales are running at about 19.8 percent below trend.
Annualizing the 19.8 percent sales reduction suggests that overall, taxable cigarette sales in
Minnesota will fall by about 42.3 million packs as a result of the tax increase.
A drop in sales this large affects not only the stores bottom line, but jobs. The tax is estimated
to have cost Minnesota as many as 1,025 lost tobacco retailing jobs, and 1,400 total jobs.
These sales and job losses will flow through the supplier chain impacting wholesalers as well as

21

Tax Burden on Other Tobacco Products: 2012, Orzechowski & Walker and John Dunham and Associates.
The influence of little cigars on the cigarette data could be larger impact than we can estimate. This is
because Minnesotas definition of little cigars includes many cigars that for purposes of federal taxation,
are popular large cigars. Because of the lack of data on cigars between 3 lb. and 4.5 lb. per 1,000, we
cannot quantify this effect. The state estimates that about 18,500 packs of little cigars would be sold in
2014. However, given that Minnesota taxes them at draconian rates - $5.66 per pack of 20 it is likely that
few little cigars will be sold in the state. See: Analysis of S.F. 2910 (Skoe)/H.F. 3303 (Anzelc), Minnesota
Department of Revenue, April 1, 2014.
8

companies that supply goods and services to retailers and wholesalers.22 All told, this tax
increase is estimated to cost the state of Minnesota about $110.9 million in overall economic
activity and about $10.7 million in business and personal taxes (not including changes to excise
tax revenues). The economic impact of the 130 percent tax increase is detailed on Table 4,
below.
Table 4
Economic Cost of Cigarette Tax Increase in Minnesota
Direct
Manufacture
Wholesale
Retail
Supplier
Induced
Total
Taxes
State and Local
Federal

Jobs
1,100
75
1,025
126
182
1,408

$
$
$
$
$
$
$

Wages
31,978,861
6,825,875
25,152,986
6,718,308
8,226,803
46,923,972

$
$
$
$
$
$
$

Output
68,186,108
16,107,714
52,078,394
18,652,677
24,074,175
110,912,960

$
$

10,753,956
10,052,534

The Cross-Border Impact of High Cigarette Taxes in Minnesota

The substantial reduction in tax-paid cigarettes is largely due to the fact that consumers have so
many different and less expensive alternative sources to purchase cigarettes and other
tobacco products. Taxable sales recorded in Minnesota cannot fully reflect actual demand.
Consumers might order cigarettes from vendors overseas via the Internet. These vendors
typically sell counterfeit versions of premium brands and use the U.S. mail or private shippers to
get them directly to consumers. Consumers also have access to cigarettes sold in Native
American smoke shops located on one of the 11 reservations in the state, or on military
commissaries and post exchanges. While many of these sales may ultimately avoid payment of
appropriate excise taxes, and residents are required by law to remit these taxes to the Department
of Revenue, widespread tax avoidance is common, either intentionally or unintentionally.
One major way that consumers can respond to higher state cigarette excise taxes is to simply
drive across state lines and purchase products in other jurisdictions with lower tax rates. In the
case of Minnesota, following the 130 percent tax increase, retailers in the surrounding states of
Iowa, North Dakota, South Dakota and Wisconsin are able to sell exactly the same product at
lower prices. For consumers in border regions, it is hard to resist driving just a few miles to save
tens or even hundreds of dollars.
Based on actual store level sales data, it appears as if Minnesota consumers are doing just that.
As the map in Figure 2 on the following page shows, there appears to be a hollowing out of
cigarette sales in border counties, with particularly large impacts occurring along the border of
Iowa and the Dakotas.
22

Note that it is assumed that manufacturers sales offices and other operations in Minnesota are not impacted
by changes in local sales, and that these are rather determined by national trends.
9

In fact, based on the store level data, per capita sales in Minnesotas border regions fell by
30.1 percent, 50 percent more than the 19.8 percent estimated reduction statewide. Prior to
the tax increase, the high relative excise rates in Minnesota encouraged cross border shopping.
Particularly on the border areas with North Dakota, but also along the Iowa and South Dakota
borders, per capita cigarette sales in Minnesota counties were lower than per capita averages in
the other jurisdictions. Only with Wisconsin, did Minnesota sell more cigarettes per capita in
border counties, and this likely reflects that fact that the major population centers of Minneapolis
and St. Paul are located very close to the border.
Figure 2
Per Capita Cigarette Sales Change Following Tax Increase

The tax increase exacerbated this bleak cross border trend. Following the tax increase, sales in
Minnesotas border counties completely collapsed, down by about 42 percent along the
North Dakota and Iowa borders, but also down by 35
Cigarette sales at Minnesota
percent along the border with South Dakota and by 27
convenience stores are plummeting
with higher taxes sending many
percent along the Wisconsin border. Per capita sales in
Minnesota counties bordering North Dakota are now just 13 smokers to North Dakota to stock up
on tobacco.
percent of those in neighboring communities. And this is
not just because the population centers of Fargo and Grand
"Our highest is $9.50 or something
Forks, North Dakota are along the border. Low per capita
like that, it's expensive cigarettes," said
Rodney Helming, owner of the Oasis
sales extend all along the North and South Dakota border
Convenience Store in Moorhead,
areas.
The most dramatic changes have occurred along the border
with Iowa. Prior to the tax, per capita sales in Minnesota
counties that bordered Iowa were higher than in the
Hawkeye state. However, following a 41.7 percent decline
in per capita sales, after the tax increase, sales in Minnesota
border areas were about half those in Iowa.

Minnesota, a store less than a mile

away from North Dakotas border.

"Cigarette sales dropped 75%, we used

to do 300 cartons a week, now we buy
70 to 80 a week," he said.
-

NACS Online, January 2014

10

The Wisconsin border area presents an interesting case as prior to the tax increase Minnesota
was a net exporter to the Badger state. Shoppers in Wisconsin took advantage of lower prices in
Minnesota and frequented retailers on that side of the border. This has changed after the tax
increase, as Wisconsin retailers now have a price advantage to those in Minnesota. Because of
this the direction of cross-border sales has been shifting, and overall taxable cigarette sales in
Wisconsin have grown by about 8 percent in the 6 months following Minnesotas tax increase.
Over time, as Minnesotas cigarette tax continues to increase (see below), Wisconsin based
retailers will enjoy a larger and larger price differential and retailers along that border could
begin to face business conditions similar to those on the western border of the state.
Detailed maps for specific border areas showing changes in sales by store are found in the
Appendix to this report.
Table 5
Change in Quarterly Per Capita Cigarette Sales in Border Counties

State
IA
ND
SD
WI

Before Increase
In State
In MN
232.2
281.0
408.2
120.8
232.1
221.8
167.0
251.5

After Increase
In State
In MN
312.2
163.8
528.5
69.5
266.1
143.8
224.8
183.5

Percent Change
In State
In MN
34.4%
-41.7%
29.5%
-42.5%
14.6%
-35.2%
34.6%
-27.1%

The Impact of Lost Cigarette Sales on Sales of Other Products at Retail

Stores that sell cigarettes generally sell other products. In the case of grocery stores and
supermarkets, cigarettes account for just 2 percent of revenue. However, the impact on
convenience stores where the vast majority of
Iowa Convenience Store Chain Invests In
cigarettes are sold is much larger. Cigarettes
North Dakota
provide as much as 19 percent of total sales for Cstores. The impact is larger when gasoline is
Casey's General Stores Inc. has announced that
excluded; according to the National Association of it has signed an asset purchase agreement to
acquire 24 Stop-n-Go locations in North
Convenience Stores, 38 percent of in-store sales
Dakota and Minnesota. 20 of the stores
23
come from cigarettes.
Casey's is acquiring are located in North
When shoppers are traveling across state lines
to take advantage of lower cigarette prices in
North Dakota or Iowa, they may actually shift
entire shopping trips to the other state.

Dakota--in Fargo, West Fargo, Jamestown,

Hillsboro, Carrington, Wahpeton and Valley
City--and four are located in Minnesota--in
Moorhead, Dilworth and Fergus Falls.
-

Casey's Stop-n-Go Deal to Serve as

Regional 'Springboard', CSP Net.com,
February 12, 2014

In other words, tobacco retailers in Minnesota

might not just be losing cigarette sales when
consumers cross borders. They are also likely losing sales of gasoline, beverages, milk, candy,
beer, coffee, salty snacks and lottery tickets the items most commonly bought along with
23

Wong, Venessa, In Convenience Stores: More Food, Fewer Cigarettes, Bloomberg Businessweek, January
17, 2013.
11

cigarettes.24 Actual data on how consumers shift other purchases when traveling across states for
cigarettes is difficult to obtain; however, in a presentation to the Federation of Tax
Administrators, Mr. Don Burke, Senior Vice President of Management Science Associates, Inc.,
a firm that collects extensive data from wholesalers and retailers, indicated that on average for
every $8.33 in cigarettes purchased, buyers bought $6.87 in non-tobacco products.25 That would
suggest that Minnesota retailers may have lost as much as $38.46 million in sales of sundry
products due to the tax increase.26 Depending on the product mix for these cross border
consumers, Minnesota is also likely losing sales tax, gas tax, alcoholic beverage taxes, and
lottery revenues to neighboring states as well.
The Impact of Annually Indexing the Cigarette Tax for Inflation
Unfortunately for retailers, the 130 percent increase is not the end of the pain. Annually, the
cigarette tax will be indexed so that it will rise as cigarette prices rise. How high the tax is raised
will be based on the annual adjustment in the wholesale sales tax on cigarettes. The calculation
for the wholesale sales tax is made each November and is effective on January 1 of the following
year. It is based on the increase in the weighted average retail price of cigarettes year-over-year,
and has been a feature of cigarette taxation in Minnesota since FY2006.
Table 6
Cigarette Price Inflation Compared to the Consumer Price Index
Year
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013

Cigarette
Prices
General Prices
2.2%
2.8%
3.9%
3.2%
2.4%
1.8%
4.4%
3.8%
5.2%
-0.4%
29.5%
2.3%
5.3%
1.2%
2.2%
2.5%
1.4%
1.3%
2.6%
1.2%

Cigarette
Gap
-0.5%
0.7%
0.6%
0.6%
5.6%
27.3%
4.2%
-0.3%
0.1%
1.4%

For the cigarette excise tax, the new rate will be equal to the current rate times the percentage
change in the wholesale sales tax. According to the Minnesota Department of Revenue, the tax
rate will increase by about 2 percent per year along with inflation. This may be a low estimate,
as cigarette prices tend to rise faster than inflation representing in part all of the regulatory
restrictions placed on their pricing and sale. As Table 6 shows, even discounting for 2009, the
year when a massive federal tax increase went into effect, the average growth in cigarette prices
24

25
26

Presentation by Don Burke, Senior Vice President, Management Science Associates, Inc., at the Federation
of Tax Administrators Annual Meeting (Tobacco Tax Section), Albuquerque, New Mexico, August 13,
2013.
Ibid.
An estimated 11.43 million packs lost to increased purchases in other states. Taking these lost tax-paid
sales times an estimated price per pack of $4.08 is equal to $46.63 million. Dividing this by $8.33 and
multiplying by $6.87 provides an estimate of lost sundry sales.
12

has been 3.3 percent per year over the past decade. This compares with consumer price inflation
of about 2 percent.27
The state of Minnesota estimates that it will generate $2.5 million from this tax accelerator in
FY 2015, increasing to $14.8 million by FY 2017 based on an elasticity of -0.95 which should
take into account volume changes and cross-border sales that will likely occur due to the higher
excise taxes.28
Based on JDAs model of the Minnesota cigarette market, the tax increase would be equal to
about 9.3-cents in the first year, rising to just under 10-cents per pack three years out.29 The
increase in the wholesale sales tax is not included as sales taxes generally rise along with price
inflation so there would be no differential impact on the market from that increase.
Table 7
Economic Impact of Tax Accelerator
Excise Tax Rate
Pack Sales Change
Lost Jobs
Lost Wages
Lost Economic Output

FY 2014
$2.830
-

FY 2015
$2.923
(45,400)
(2)
($48,036)
($111,280)

FY 2016
$3.020
(369,190)
(13)
($390,633)
($904,933)

FY 2017
$3.120
(938,285)
(34)
($992,783)
($2,299,862)

Based on JDAs model, the increase will lead to a reduction of as many as 938,000 packs of
additional sales by Fiscal Year 2017, and there would be additional job losses as a result of the
Accelerator, primarily in retail outlets like convenience stores or food shops that sell tobacco
products. Overall, the states economy would be nearly $2.3 million smaller as a result of this
tax accelerator, a figure that will only increase as prices continue to rise. Table 7 outlines the
economic effects of the excise tax accelerator.
The figures in Table 7 represent economic impacts and do not account for State revenues from
the accelerator, which are currently forecast to raise $2.5 million in the first year (where it would
only be imposed after 6 months), $9.0 million in the second year, and $14.7 million in FY
2017.30
These job losses may be understated, as the price for cigarettes in Minnesota has now become
higher than those in Wisconsin. Prior to the last tax increase, consumers in Wisconsin purchased
a large amount of cigarettes from Minnesota based retailers. This has now switched, and were
the excise tax to be increased year over year, the differential would only grow. This would make
business conditions for convenience stores, gasoline stations, and other retailers who rely on
tobacco sales in border counties like Carlton, Dakota, Houston, Washington and Winona, even
worse.
27
28

29

30

Bureau of Labor Statistics, Consumer Price Index Database, at: www.bls.gov/cpi/

The revenue increase in 2014 assumes that the higher tax is imposed over just half of the year. Analysis of
S.F. 2910 (Skoe)/H.F. 3303 (Anzelc), Minnesota Department of Revenue, April 1, 2014.
Note that the tax increase would take effect half way through FY 2015; therefore the impact has been cut
by half in the table.
Analysis of S.F. 2910 (Skoe)/H.F. 3303 (Anzelc), Minnesota Department of Revenue, April 1, 2014.
13

The Impact of the 130 Percent Tax Increase on Minnesota State Revenues
While the Minnesota tax is punishing retailers and consumers alike, Minnesota cigarette tax
revenues appear to be meeting pre-tax expectations.31 Comparing July 2012 through February
2014 with the same period a year earlier, revenues from cigarette taxes have grown by $128.3
million or 52.1 percent.32 This is true even though sales have fallen by roughly 39.6 million
packs.
Table 8
Regional Cigarette Tax Revenues

July Through December

Minnesota
Iowa
North Dakota
South Dakota
Wisconsin

2011
2012
$142,932,792 $195,706,159

2013
$316,059,668

Change
121.1%

$104,093,092 $103,691,821
$11,508,457
$12,111,730
$27,550,457
$28,741,503
$306,366,376 $298,539,071

$103,137,614
$12,936,240
$29,858,112
$307,427,354

-0.9%
12.4%
8.4%
0.3%

This may be due to the fact that overall taxed per capita cigarette sales in Minnesota were
already quite low, probably because cross-border sales with lower tax jurisdictions like North
Dakota already represent a sizable share of the market for Minnesota smokers. At 43.1 packs
per capita, sales are well under the national average of 51.0 packs per capita. 33 In contrast,
per capita sales for North Dakota are 72.5. These differentials are reflected in the size of
the market for smuggled cigarettes in the state. According to a recent analysis by the Tax
Foundation, prior to the 130 percent tax increase, as much as 22.4 percent of cigarettes
consumed (on net) in Minnesota were
Compared to the previous estimates, [cigarette
purchased in other jurisdictions, including
tax revenues] are $23.8 million higher in the
other states, on non-taxed territories like at
first year and $28.6 million higher in the
Native American smoke shops, or over the
second year, primarily due to higher than
expected year-to-date collections. Minnesota
internet. This means that Minnesota already
th
enacted a significant cigarette tax rate increase
ranked 14 across all states in terms of the size of
on July 1, 2013, resulting in its current rate of
the non-taxed market even before the tax was
$3.432 per pack (which is higher than
34
increased. While this has grown, a very large
Wisconsin's tax rate of $2.52 per pack). It is
loss in sales would be unlikely since so many
believed that higher year-to-date tax collections
are, in part, due to consumers living along the
smokers are already avoiding Minnesota state
state border purchasing cigarettes in
taxes.
Even so, a remarkable aspect of the tax increase is
that the lower-tax, bordering states of North
Dakota, South Dakota, and Wisconsin are all
31

32

33
34

Wisconsin, rather than in Minnesota, in

response to that state's tax increase.
-

Wisconsin Legislative Fiscal Bureau,

January 2013

Analysis of H.F. 91 (Lenczewski), As Amended in House Tax Committee, Analysis Revised for February
2013 Forecast, Minnesota Department of Revenue, March 12, 2013.
The latest data available from Minnesota are from February 2014. Data for most other regional states are
only available through December.
Orzechowski, Bill and Rob Walker, The Tax Burden on Tobacco, Volume 48, March 2014.
Henchman, Joseph and Scott Drenkard, Cigarette Taxes and Cigarette Smuggling by State, Fiscal Fact 241,
The Tax Foundation, March 2014.
14

showing increased revenues in the absence of cigarette tax increases; this is in an environment of
falling cigarette sales nationally. In other words, rather than benefitting the economy of
Minnesota, this tax increase is generating new business in the regional marketplace at the
expense of Minnesota retailers, workers and taxpayers.
As Table 8 shows, even with the loss of sales following the tax increase in July of 2013,
Minnesota is generating significant additional tax revenues for border taxes, particularly for
North and South Dakota. In the case of Minnesota, the average month-to-month change in
revenues for the months following the tax increase has been 52 percent, reflecting both higher
per unit revenues and substantial sales reductions.
It should also be remembered that the tax increase happened just recently, and there are only a
few months of data reported since that time. As consumers outside of the border counties
become more aware of the ability to purchase cigarettes from less expensive outlets in Iowa,
North Dakota and now even Wisconsin, taxable sales in Minnesota may fall further. Consumers
along the border with North Dakota have long realized that savings can be had by purchasing
tobacco in that jurisdiction. Now, Minnesotas large population centers of Minneapolis and St.
Paul are within a short drive of cheaper tobacco products in Wisconsin. In fact, that state
recognizes that it is benefitting from Minnesota shoppers, who now travel a short distance to
stores in border regions of the Badger State to purchase their tobacco products.35
These cross border sales can grow exponentially over time. For example, New York City has the
highest cigarette excise taxes in the country, and research has shown that nearly two-thirds of
tobacco sales are already made on the black market or from retailers located in other states.36 It
may be that Minnesota currently lacks a black market infrastructure; however, given the profit
potential from illicit trade, that is likely to change.

35

36

Letter from Robert Lang, Director of the Legislative Fiscal Bureau to Representative John Nygren, and
Senator Alberta Darling, outlining the status of the States general fund. January 16, 2014
See: John Dunham and Associates, An Examination of Cigarette Sales in New York State By Source: 2011,
Prepared for the New York Association of Convenience Stores, October 10, 2012. On line at:
www.nyacs.org/documents/JohnDunhamCigTaxEvasionReportOct2012.pdf Also see: LaFaive, Michael
and Todd Nesbit, Cigarette Smuggling Remains High in Michigan, Elsewhere, Mackinac Center for Public
Policy, Viewpoint on Public Issues, February 4, 2013, at: www.mackinac.org/18219. Another recent
analysis examined certain neighborhoods in the Bronx and concluded that over 76 percent of discarded
cigarette packs in that area did not have proper tax indicia. See: Kurti, Marin, et. al., The illegal cigarette
market in a socioeconomically deprived inner-city area: the case of the South Bronx, Tobacco Control,
published on-line August 4, 2012.
15

Methodology Data and Sources

This analysis is based on a number of mathematical models, and as with all models, this one is
only a representation of reality. The model used to project the economic impact of lost sales is a
multi-state demand model. Since consumers have so many different and less expensive
alternative sources to purchase cigarettes and other tobacco products, the taxable sales recorded
in Minnesota cannot fully reflect actual demand. In particular, since many of these alternative
transactions are illegal, they are not recorded in official records, making actual data on
alternative transactions impossible to obtain. Therefore, a model has to be constructed to
determine actual cigarette demand in the state.37
Given the degree of price differentiation of products available, every consumer faces multiple
choices regarding where and how to purchase cigarettes. This model addresses that and estimates
the probability attached to each of the possible decisions.

37

The model used in this analysis is a multi-segment demand model. This model is similar to those that JDA
has constructed to model the national cigarette, moist snuff, cigar, beer, wine, spirits, and aviation fuel industries all of which have similar tax structures. This model examines cross border sales of cigarettes
among the 50 states and the District of Columbia, as well as certain untaxed sales, mainly motivated by
price differentials resulting from different tax rates. The model estimates in-state demand of own-state
taxed sales of cigarettes and exports to and imports from other states. The general methodology is a twostage estimation of the demand equation linked to a non-linear programming model of the import and
export patterns. Taxable sales were obtained from The Tax Burden on Tobacco: 2012. Price per pack was
obtained from The Tax Burden on Tobacco 2012. The prices are adjusted for state sales tax. Population
Estimates, Race and Hispanic Origin from the Bureau of the Census. State-to-state centroid distance data
were obtained from Caliper Corp.
16

About John Dunham and Associates

John Dunham and Associates (JDA) is a leading New York City based economic consulting firm
specializing in the economics of fast moving issues. JDA is an expert at translating complex
economic concepts into clear, easily understandable messages that can be transmitted to any
audience. Our companys clients include a wide variety of businesses and organizations,
including some of the largest Fortune 500 companies in America, such as:
Altria
Diageo
Feld Entertainment
Forbes Media
MillerCoors
Verizon
Wegmans Stores
John Dunham is a professional economist with over 25 years of experience. He holds a Master
of Arts degree in Economics from the New School for Social Research as well as a Masters of
Business Administration from Columbia University. He also has a professional certificate in
Logistics from New York University. Mr. Dunham has worked as a manager and an analyst in
both the public and private sectors. He has experience in conducting cost-benefit modeling,
industry analysis, transportation analysis, economic research, and tax and fiscal analysis. As a
senior economist for Philip Morris, he developed tax analysis programs, increased cost-center
productivity, and created economic research operations. He has presented testimony on
economic and technical issues in federal court and before federal and state agencies.
Prior to Phillip Morris John was an economist with the Port Authority of New York and New
Jersey, the Philadelphia Regional Port Authority and the City of New York.
About Orzechowski & Walker
Orzechowski and Walker (O&W) is an economic and policy research and analysis firm based in
Arlington, VA. O&W specialize in clear and concise analysis of legislative and regulatory issues
at the federal, state, and local level. O&W have worked with a variety of business, public policy,
public relations, and tax organizations, including Fortune 500 companies and major trade
associations.
O&W have more than 35 years combined experience studying cigarette and other tobacco
product taxes. O&W produce The Tax Burden on Tobacco, an annual, authoritative compendium
of federal, state, and local tobacco tax data. The Tax Burden is used by tobacco companies, state
departments of revenue and other government entities, public health groups, and financial
research firms, alike.

17

Appendix
1: Cross Border Examples
2: Impact of Proposed Couponing Ban

18

Albert Lea Minnesota Border Area

Percent Change in Sales By Zip Code Following Tax Increase

Quarterly sales in Freeborn County Minnesota averaged 263.2 cigarettes per capita prior to the
130 percent jump in tobacco tax rates. They fell 38.3 percent to just 162.4 cigarettes per quarter
following the tax increase.
On the other hand, quarterly cigarette sales in stores located in Worth County Iowa averaged
238.7 cigarettes per capita prior to the increase, and 416.1 after the tax went into effect in
Minnesota. This was a 74.3 percent increase in quarterly per capita cigarette sales and reflects
cross border movement out of Albert Lea area stores.

19

Breckenridge Minnesota Border Area

Percent Change in Sales By Zip Code Following Tax Increase

Quarterly sales in Wilkin County Minnesota averaged 33.5 cigarettes per capita prior to the 130
percent jump in tobacco tax rates. They fell 63.7 percent to just 12.2 cigarettes per quarter
following the tax increase.
On the other hand, quarterly cigarette sales in stores located in Richland County North Dakota
averaged 787.1 cigarettes per capita prior to the increase, and 1,180.0 after the tax went into
effect in Minnesota. This was a 49.9 percent increase in quarterly per capita cigarette sales and
reflects cross border movement out of Breckenridge area stores.

20

Duluth Minnesota Border Area

Percent Change in Sales By Zip Code Following Tax Increase

Quarterly sales in St. Louis County Minnesota averaged 325.7 cigarettes per capita prior to the
130 percent jump in tobacco tax rates. They fell 22.9 percent to just 251.0 cigarettes per quarter
following the tax increase.
On the other hand, quarterly cigarette sales in stores located in Douglas County Wisconsin
averaged 195.6 cigarettes per capita prior to the increase, and 309.2 after the tax went into effect
in Minnesota. This was a 58.1 percent increase in quarterly per capita cigarette sales and reflects
cross border movement out of Duluth area stores.

21

Fargo North Dakota Border Area

Percent Change in Sales By Zip Code Following Tax Increase

Quarterly sales in Clay County Minnesota averaged 99.2 cigarettes per capita prior to the 130
percent jump in tobacco tax rates. They fell 51.1 percent to just 48.5 cigarettes per quarter
following the tax increase.
On the other hand, quarterly cigarette sales in stores located in Cass County North Dakota
averaged 384.3 cigarettes per capita prior to the increase, and 498.4 after the tax went into effect
in Minnesota. This was a 29.7 percent increase in quarterly per capita cigarette sales and reflects
cross border movement into Fargo area stores.

22

Grand Forks North Dakota Border Area

Percent Change in Sales By Zip Code Following Tax Increase

Quarterly sales in Polk County Minnesota averaged 166.8 cigarettes per capita prior to the 130
percent jump in tobacco tax rates. They fell 36.4 percent to just 106.0 cigarettes per quarter
following the tax increase.
On the other hand, quarterly cigarette sales in stores located in Grand Forks County North
Dakota averaged 402.9 cigarettes per capita prior to the increase, and 499.2 after the tax went
into effect in Minnesota. This was a 23.9 percent increase in quarterly per capita cigarette sales
and reflects cross border movement into Grand Forks area stores.

23

Hudson Wisconsin Border Area

Percent Change in Sales By Zip Code Following Tax Increase

Quarterly sales in Washington County Minnesota averaged 198.0 cigarettes per capita prior to
the 130 percent jump in tobacco tax rates. They fell 30.9 percent to just 136.8 cigarettes per
quarter following the tax increase.
On the other hand, quarterly cigarette sales in stores located in St. Croix County Wisconsin
averaged 149.5 cigarettes per capita prior to the increase, and 226.6 after the tax went into effect
in Minnesota. This was a 51.6 percent increase in quarterly per capita cigarette sales and reflects
cross border movement into Hudson area stores.

24

Jackson Minnesota Border Area

Percent Change in Sales By Zip Code Following Tax Increase

Quarterly sales in Jackson County Minnesota averaged 220.8 cigarettes per capita prior to the
130 percent jump in tobacco tax rates. They fell 32.1 percent to just 150.0 cigarettes per quarter
following the tax increase.
On the other hand, quarterly cigarette sales in stores located in Dickinson County Iowa averaged
317.0 cigarettes per capita prior to the increase, and 416.4 after the tax went into effect in
Minnesota. This was a 31.3 percent increase in quarterly per capita cigarette sales and reflects
cross border movement out of Jackson area stores.

25

La Crosse Wisconsin Border Area

Percent Change in Sales By Zip Code Following Tax Increase

Quarterly sales in Houston County Minnesota averaged 698.9 cigarettes per capita prior to the
130 percent jump in tobacco tax rates. They fell 65.7 percent to just 239.7 cigarettes per quarter
following the tax increase.
On the other hand, quarterly cigarette sales in stores located in La Crosse County Wisconsin
averaged 148.8 cigarettes per capita prior to the increase, and 196.1 after the tax went into effect
in Minnesota. This was a 31.7 percent increase in quarterly per capita cigarette sales and reflects
cross border movement into La Crosse area stores.

26

Sioux Falls South Dakota Border Area

Percent Change in Sales By Zip Code Following Tax Increase

Quarterly sales in Rock County Minnesota averaged 186.8 cigarettes per capita prior to the 130
percent jump in tobacco tax rates. They fell 41.1 percent to just 109.6 cigarettes per quarter
following the tax increase.
On the other hand, quarterly cigarette sales in stores located in Minnehaha County South Dakota
averaged 250.7 cigarettes per capita prior to the increase, and 280.5 after the tax went into effect
in Minnesota. This was a 11.9 percent increase in quarterly per capita cigarette sales and reflects
cross border movement into Sioux Falls area stores.

27

Ortonville Minnesota Border Area

Percent Change in Sales By Zip Code Following Tax Increase

Quarterly sales in Big Stone County Minnesota averaged 204.1 cigarettes per capita prior to the
130 percent jump in tobacco tax rates. They fell 52.0 percent to just 97.8 cigarettes per quarter
following the tax increase.
On the other hand, quarterly cigarette sales in stores located in Grant County South Dakota
averaged 229.5 cigarettes per capita prior to the increase, and 363.4 after the tax went into effect
in Minnesota. This was a 58.4 percent increase in quarterly per capita cigarette sales and reflects
cross border movement out of Ortonville area stores.

28

29

The Economic Consequences of a Proposed ban on Cigarette Couponing and Price

Promotions In Minnesota
Executive Summary:
Proposals to restrict tobacco companies from offering discounts to consumers will lead
to additional job losses. In 2012 about $121.1 million in coupons and retailer discounts
were applied to cigarette purchases in Minnesota. This is equal to approximately 51.6-cents
per pack. Banning these discounts would reduce cigarette sales in the state by 16.5 million
packs, resulting in a loss of about 475 jobs, and over $37.8 million in economic activity in
Minnesota.
Bans on coupons and price discounts will reduce tax revenues in the State. A ban on
coupons and price promotions would lead to a reduction of $3.65 million in state and local
business and personal taxes, and would cut excise and sales taxes by $55.2 million. Overall,
about 19 percent of the revenues that the state gained from its 130 percent tax increase would
be lost if a ban were implemented.

The Potential Impact of a Proposed Ban on Couponing and Price Promotion

Data on actual promotional allowances paid to Minnesota based retailers are not available;
however, the Federal Trade Commission publishes information on overall promotional
allowances paid to retailers nationally.1 Projecting these data through 2012, suggest that
nationally about $ 7.2 billion in product discounts and coupon payments were made in 2012, of
which about $121.1 million were applied to purchases in Minnesota.2 This is equal to
approximately 51.6-cents per pack.
Table 1
Economic Impact of Proposed Coupon Ban
Direct
Manufacture
Wholesale
Retail
Supplier
Induced
Total
Taxes
State and Local
Federal

Jobs
(370)
(27)
(343)
(43)
(62)
(475)

$
$
$
$
$
$
$

Wages
(10,887,150)
(2,461,826)
(8,425,323)
(2,291,170)
(2,805,618)
(15,983,937)

$
$
$
$
$
$
$

Output
(23,253,765)
(5,809,423)
(17,444,342)
(6,361,193)
(8,210,107)
(37,825,064)

$
$

(3,650,566)
(3,425,113)

This ban would therefore amount to a retail price increase of about 51.6-cents per pack on
average, on top of the already high excise and sales taxes. Similarly to the taxes, price increases
as a result of regulations are passed through to consumers who react by reducing their taxable
sales and increasing their cross border purchases.
Based on this projected price increase, it is estimated that overall sales would fall by an
additional 16.5 million packs, resulting in a loss of about 475 jobs, and another $37.8 million in
lost economic activity in Minnesota. In addition, state and local business and personal taxes
would fall by over $3.65 million, and excise and wholesale sales taxes would fall by $55.2
million, as the state would not benefit from simply harming consumers.
The couponing ban would reduce Minnesota fiscal revenues by about $58.9 million. This
reduction is equal to about 18.6 percent of what the state expected to receive from the 130
percent increase in the cigarette tax rate.3

1
2
3

See: Federal Trade Commission, Federal Trade Commission Cigarette Report for 2011, 2013.
Minnesota accounts for roughly 1.67 percent of total taxable pack sales Op. cit. Orzechowski.
Analysis of H.F. 91 (Lenczewski), As Amended in House Tax Committee, Analysis Revised for February
2013 Forecast, Minnesota Department of Revenue, March 12, 2013.
2