Davis May Borrow $4 Billion in Tobacco Settlement Funds to Cover State Budget Deficit

In response to "worsening" budget revenue estimates, Gov. Gray Davis (D) plans to borrow as much as $4 billion in future tobacco settlement funds to cover the state's estimated $17.5 billion budget deficit, which could affect a number of state health care programs, the San Francisco Chronicle reports. Davis announced earlier this year that he planned to borrow $2.4 billion in tobacco settlement funds, but he may decide to borrow more now that estimates of the state's budget deficit have increased from $12.5 billion to $17.5 billion for the fiscal year that begins July 1. Some health care advocates have criticized Davis' plan, which they say would force the state to "squeeze" health care programs or take funds from other parts of the budget to cover the cost of the programs. The state had earmarked more than half of the tobacco settlement funds to expand health care coverage for low-income children. In addition, the state had planned to spend an additional $28 million on breast and cervical cancer treatment and $20 million for prostate cancer services. Sandy Harrison, a spokesperson for the Department of Finance, said that "no decision has been made" on the amount that Davis will borrow from the state's share of the tobacco settlement (Lucas, San Francisco Chronicle, 4/4).