TOBACCO SETTLEMENT: Lawmakers Uncertain How To Spend Cash
With the first $450 million check from the landmark tobacco settlement set to arrive at the state treasury in mid-2000, state legislators and administrators have barely discussed possible uses for the money, mainly because they "have faint notion of what to do with the massive windfall." The San Francisco Examiner reports that Gov. Gray Davis "plans to spend the first two checks -- totaling $562 million -- for the rather mundane job of helping fill a projected budget deficit." The Legislature has as of yet only introduced two bills "dictating how the state should spend its portion." Assemblywoman Helen Thomson (D-Davis), who wants to use the money to expand Healthy Families, said, "Certainly, I have not been in any meeting where it was discussed." The Examiner reports that lawmakers are mostly "looking at health and anti- smoking programs, but others want to use the money for new schools, prisons, psychiatric hospitals and road repairs." University of California-San Francisco professor and anti-smoking advocate Dr. Stanton Glantz, said the money should go toward augmenting anti-smoking programs.
In a report released last week, California legislative analyst Elizabeth Hill said, "As the Legislature debates its approach toward utilizing these funds, it is critical that the uncertainties surrounding the level of funds the state will receive ... be taken into account" (Salladay, 1/18). She said several factors could reduce the amount that California is supposed to receive. "We believe that it is relatively certain that the state will receive the projected amounts of revenues from the settlement at least in the short run. However, several of the uncertainties ... make the long-term funding levels much more questionable," she said. According to Hill, the federal government may succeed in recouping a percentage of the deal to recover its costs of treating Medicaid patients. In addition, tobacco companies' revenues could shrink, and as a result their payments would be lower. The payout could also drop "if local governments that don't sign the agreement win their own lawsuits against the industry." Finally, according to Hill, if certain cigarette companies go bankrupt during the life of the deal, other cigarette makers would not have to pick up the slack (AP/Capitol Alert, 1/16). Click here for past coverage of the tobacco settlement.