Georgia Protects Tobacco
ATLANTA (AP) - When states sued tobacco companies en masse over smokers' illnesses, Georgia joined in for a share of the cash settlement. Now attacks on the industry are taking a toll at home, and state lawmakers want to cushion the blow.
The General Assembly voted this year to give protection from potentially bankrupting lawsuits - and up to $6 million in tax breaks - to Brown & Williamson, the Kentucky-based tobacco giant that owns a large cigarette plant in Macon.
At the same time, lawmakers prepared to reap the first installment of an expected $4.8 billion from the national tobacco settlement, which Georgia joined to recoup the cost of treating sick smokers.
Anti-smoking advocates say the state is sending conflicting signals - blaming tobacco companies for health problems and demanding compensation, then passing out perks to keep them in business.
``It's a little schizophrenic,'' said Roger Salazar, a spokesman for the American Cancer Society. ``It goes to show you how deep the pockets of Big Tobacco are and how much influence they have over these legislatures.''
Legislative leaders admit their positions won't always jibe when dealing with tobacco, a legal product with harmful risks and economic rewards.
``The whole tobacco controversy is a mixed message,'' said House Majority Leader Larry Walker. ``For years the federal government subsidized tobacco, they taxed tobacco and then they want to say tobacco's killing people. ... It's a struggle between health and economic prosperity.''
Walker said he refrained from voting on both bills because Brown & Williamson is a client of his law firm.
Gov. Roy Barnes has signed into law a $25 million cap on the amount of bond money corporations must post while they appeal massive punitive damage awards imposed by a jury. Virginia, North Carolina and Kentucky passed similar laws.
Tobacco companies are anticipating a damage award of possibly hundreds of billions of dollars in a Florida lawsuit filed on behalf of 500,000 smokers. Florida law requires companies to post a bond equal to the damage award while they appeal, which cigarette makers say could force them into bankruptcy.
In Georgia, the bond cap applies even if the judgment is rendered in another state.
The Legislature also approved up to $6 million in annual tax credits for companies that manufacture cigarettes in Georgia for export to other countries.
Rep. Robert Reichert sponsored the bill to help Brown & Williamson stay in business in Georgia.
The company - which makes Kools, Carltons and Lucky Strikes - employs 2,900 at its Macon plant, the only major cigarette plant in the state, with a payroll of $190 million.
Its work force outnumbers Georgia's 1,480 tobacco farmers, whose combined income last year was $105 million, said J. Michael Moore, a tobacco specialist with the University of Georgia Extension Service.
The plant has been hurt by slumping cigarette sales as tobacco companies have raised prices to meet the demands of the national settlement. Brown & Williamson had to shut it down for a week last month, furloughing its 2,000 production workers.
``They began to think, `Good grief! What's going to happen to us?''' said Reichert, who says the employees' union asked for his help in passing a tax incentive to keep the plant open.
Barnes has yet to sign the bill. He said he's trying to weigh moral and health concerns about cigarette exports against the argument that ``these jobs are going to be somewhere, and should they be here in Georgia?''
Brown & Williamson did not ask lawmakers for the tax break, said Jim Teague, spokesman for the Macon plant.
But the company did lobby lawmakers for the bond cap on punitive damages. Though the measure would apply to any type of business, Brown & Williamson asked for it as part of a larger bill dealing with corporate lawsuits. House Judiciary Chairman Jim Martin said the cap makes good sense.
``If there's a trial court or jury that really slams them hard and there's an enormous verdict and they have trouble filing an appeal bond, it requires a corporate defendant to reach a settlement prematurely,'' Martin said. ``It's a way to control what I call runaway juries.''
Brown & Williamson contributed $20,900 to Georgia campaigns in 1998, not enough to be considered a heavyweight political contributor. The company gave $4,000 to Barnes. Individual lawmakers received $150 to $750.