Case unlikely to affect Colorado
A $145 billion award handed down by a Florida jury against the tobacco industry isn't likely to have any short-term impact on Colorado's share of a nationwide agreement with cigarette makers, Attorney General Ken Salazar said Tuesday.
However, in a letter to Colorado House Speaker Russell George, R-Rifle, the state's chief lawyer said all states are analyzing options to protect funding.
Colorado lawmakers earlier this year decided to spend the state's $2.9 billion share on programs including nurse visits to low-income first-time mothers and teaching at-risk children to read.
However, the state's share could be dramatically reduced or even lost if cigarette sales drop tremendously or if the companies are forced into bankruptcy.
"Even though there is no reason at this time to assume that tobacco industry payments to the states will be interrupted, the Tobacco Committee of the National Association of Attorneys General took the step a few months ago of retaining a nationally recognized law firm to analyze the states' options in the context of a hypothetical tobacco industry bankruptcy filing," Salazar said in his letter.
But he stressed that the step was taken simply as a precaution and said a bankruptcy is an unlikely outcome in the Florida class-action lawsuit.
"Florida law prohibits punitive verdicts that would put companies out of business and requires judges to reduce such awards," Salazar said.
Colorado has received more than $115 million and will get its next payment Jan. 10.
However, Senate Minority Leader Mike Feeley, D-Lakewood, who carried an unsuccessful bill to sell the state's promised revenues at a lower price, and State Treasurer Mike Coffman, who first broached the idea, said the Florida case demonstrates why they pushed the bill.
"I personally think we missed an opportunity this year to put our efforts into programs rather than worrying about what might happen to the funding stream," Feeley said. "It's probably too late now. How many bondholders would want to purchase this given what has happened? Our bond opportunity is probably gone."
But for Coffman, the concern was not only the potential for lost revenues, but the state remaining in what he describes as "an unholy alliance" between government and the tobacco industry.
"I think you'll see all across this country where government steps in to protect its annual payments," Coffman said.