Adult smoking rates have decreased in two of the past three years and teen smoking already is below the 2010 goal set by a national coalition of health care professionals.
But because increasing funding for anti-smoking programs - coupled with the higher tax and a growing social stigma attached to smoking - is reducing the number of Colorado smokers, the amount of money coming in is falling, too.
Amendment 35 brought in $169.6 million in its first year. That number has fallen two straight years, and budget forecasts show continued declines that could leave program recipients with $135.5 million in fiscal year 2011-12 - a 20 percent drop before inflation is factored in.
Legislators and authors of the law say they anticipated this erosion and feel safe in having allocated most of the new money in yearly grants that can be reduced without great upheaval. But 46 percent of revenues go to increasing the number of low-income Coloradans on public insurance programs like Medicaid and Children's Health Plan - a part of the budget that can't be chopped without inflicting harm.
"That's a problem if the funds aren't there, because you can't provide services if you don't have money. In the end, if we lose enough money, less kids will get services," said Sen. Betty Boyd, a Lakewood Democrat who sponsored the bill implementing the tax increase.
The reported decrease in smoking may be skewed by smuggling to avoid higher cigarette taxes.
According to a study released Tuesday, cigarette smuggling nationwide is on the rise.
The study, by the free-market Mackinac Center for Public Policy of Michigan, estimates 18.1 percent of Cigarettes consumed in Colorado in 2006 were smuggled into the state.
That definition includes Cigarettes purchased at a lower tax rate across state borders, Cigarettes bought on the Internet and black-market Cigarettes sold by people without licenses to do so.
Smuggling numbers rise as cigarette taxes go up, author Mi chael LaFaive said. Colorado, for example, had an average smuggling rate of just 5.9 percent from 1990 to 2006 but saw numbers spike in recent years.
"If (states) don't factor smuggling into their revenue forecasts, they will almost always be wrong about the amount of revenue they think they can raise," LaFaive said.