TOBACCO: State Legislature Calls For Tobacco Divestiture
Assemblyman Wally Knox (D-Beverly Hills) is proposing "legislation that would require the Public Employees Retirement System to sell off" its $1 billion in tobacco stock, the Sacramento Bee reports. With holdings totaling more than $100 billion, CalPERS "is the largest institutional investor in the stock market." However, CalPERS spokesperson Brad Pacheco noted that only 1% the public fund's stocks are tobacco-related and that "investment decisions based on politics rather than economics were rare." Knox's bill (AB 1744) would mandate that CalPERS "sell off one-third of its tobacco shares each year for the next three years." Knox said, "Tobacco stocks are extremely volatile, and susceptible to the latest headline. Over a five-year period, the non-tobacco portion of the PERS portfolio has outperformed the tobacco stocks" almost two to one. He said that with the Democrats in control of the state Assembly, "he is confident his bill ultimately will land on the desk of Gov. Pete Wilson." State Controller and CalPERS board member Kathleen Connell (D) said she was unsure of her position on the bill. "My primary responsibility to PERS is that of a financial officer. It is my role to make sure that I make prudent decisions for the retirement plans for state workers," he said. The CalPERS board will consider the Knox proposal at its February 17 meeting, the Sacramento Bee reports (York, 2/13).
Money That Could Burn
Separately, the Sacramento Bee reports that as "the 1998 election season gets underway, Assembly Speaker-elect Antonio Villaraigosa (D-Los Angeles) wrestles with the question of whether to tap a potentially important source of campaign cash: big tobacco." While Villaraigosa "knows taking tobacco money could hurt him in the future," he also knows that "part of the speaker's job is raising enough campaign cash to preserve the Democrats' slim majority in the lower house." Villaraigosa's "dilemma," reports the Bee, "illustrates the long-standing, symbiotic relationship between the cigarette industry and the Legislature." However, "health advocates say the election-year climate may actually make lawmakers more reluctant to pass legislation friendly to the tobacco industry" (Vellinga, 2/15).