LOS ANGELES, June 8 (Reuters) - Campaigns for and against a proposed dollar-per-pack cigarette tax hike in California held their breath on Friday, each hoping to eke out a slim victory by the time voters' final ballots are tallied in a race still too close to call.
Voters were widely reported to have narrowly rejected the ballot question, known as Proposition 29, on Tuesday, a result observers largely attributed to a $47 million advertising blitz mounted against the measure by big tobacco companies.
But as of Friday, backers of the initiative were refusing to concede defeat, pointing to the opposition's shrinking lead as election officials reported nearly 1 million ballots still left to count.
Both sides in the Prop 29 campaign say it will probably be another week or two before the outcome of the race is settled.
California counties have until July 3 to complete their vote tallies and three more days to report their results to the secretary of state.
Californians awoke the morning after the election to news that Prop 29 had lost by a mere 63,000 votes, a tiny fraction of the more than 4.4 million ballots cast in the state.
But opponents' lead had declined to just under 53,000 votes on Thursday and to 40,000 on Friday as the count of mail-in and provisional ballots continued, according to figures posted by the California Secretary of State's office.
Prop 29 political consultant Steve Smith said he calculated the margin had tightened even further on Friday to about 30,000, based on results from late-reporting counties that had yet to be formally included in the statewide total.
On Friday afternoon, the Secretary of State's Office reported it still had nearly 973,000 ballots left to tally, not including an unknown number outstanding from 12 of California's 58 counties that had yet to submit their final results.
"We're talking about 25 percent of all the votes cast in the election," Smith said, adding, "We obviously like the trend."
Prop 29 opponents were keeping their fingers crossed, as well.
"We were very encouraged coming out of election night," said Beth Miller, a spokeswoman for the No on Prop 29 campaign. "There are still quite a few ballots to be counted. We don't anticipate any huge shifts and swings in the vote outcome, but obviously we are watching and waiting with keen interest."
Prop 29 would increase the state tax on cigarettes by $1 to $1.87 a pack, with revenues -- estimated at $735 million in the first year -- going to medical research on tobacco-related illnesses and programs to prevent and control tobacco use.
Championed, among others, by the American Cancer Society and cycling great and cancer survivor Lance Armstrong, the measure had enjoyed a commanding lead in polls earlier in the year.
But foes, led by major tobacco companies, vastly out spent the yes campaign, plastering the airwaves with ads casting Prop 29 as a misguided tax hike that would create a new bureaucracy and questioning how money raised by the tax would be used.
The ads claimed much of the revenue could be spent out of state and criticized the measure for earmarking no funds to help shore up anticipated budget cuts in state healthcare programs.
Prop 29 supporters branded the ads as deceptive, saying they distracted many voters from the central aim of the measure -- reducing tobacco consumption by making cigarettes more costly. Smith said the measure would allow only 2 percent of revenues to be spent on administrative costs.
California voters last approved a tobacco tax hike in 1998. A 2006 proposal to increase the tax was narrowly defeated.
Some observers have suggested that voters' reluctance to embrace Prop 29 bodes ill for broad tax increases that Governor Jerry Brown plans to put on the ballot in November to help close a state budget deficit projected at $15.7 billion. But Brown has shrugged off that notion, saying the result of the Prop 29 race was a function of the measure being out-gunned in advertising. (Editing by Alex Dobuzinskis and Lisa Shumaker)