Monroe richer in tobacco cash
(August 27, 2000) -- Monroe County now has $142.5 million in cash from its sale of bonds backed by payments from the county's share of a national tobacco settlement.
But the question remains how Monroe County Executive Jack Doyle will seek to spend all this money, the biggest infusion of funds in the county's history.
The bonds were sold earlier this month, and because of favorable market conditions, the county received $142.5 million, said Shawn Griffin, counsel for the local Monroe Tobacco Asset Securitization Corp., responsible for the sale.
That's $5.5 million more than the $137 million financial analysts estimated that the county would get from the bond sale.
"We had a very favorable market reaction," said Griffin. The county ended up paying an average of 6.4 percent interest on the bonds rather than the 6.6 percent predicted.
Doyle sought the bond sale partly because of the uncertainty about whether the tobacco companies would be able make their annual payments to the county in the years ahead.
Tobacco companies will shell out $206 billion to states over the next 25 years. Four other states settled separately for an additional $40 billion.
But by taking a large part of its tobacco money upfront, the county will get far less than the $761 million it was slated to receive from annual payments.
Monroe County was the fourth locality in the state -- the others are New York City and Nassau and Westchester counties -- to raise a large lump sum by selling bonds backed by tobacco money.
Doyle has said that he would use $83 million of the bond money for debt reduction and $54 million for major projects -- including an expansion of the Seneca Park Zoo.
But Doyle has not specified how much would be spent on the zoo or which other projects would receive funding, other than to say that $2 million would be used for preserving open space.
And the bill that the County Legislature enacted to authorize the bond sale doesn't spell out particular projects.
Doyle spokesman John Riley said the additional $5.5 million received from the bond sales will be spent on projects, bringing the total of tobacco money designated for such use to almost $60 million.
Riley also said that the county has drafted a list of possible projects that could get some of that funding -- but would not release the list.
And he said, "The point here is that we are paying for things that would otherwise have been paid for with borrowed money."
Gerald Mecca, chief financial officer for the county, added that most of the almost $60 million would be spent over the next two years on approved projects in the county's capital budget.
But Legislator Chris Wilmot, D-Rochester, said that the Doyle administration should make public how it plans to spend the money. He urged that the $5.5 million extra in funds from the bond sale be used to mount an anti-smoking campaign.
"Monroe County would not have a dime of this money if the state attorneys general had not gotten together and obtained this money on behalf of all those who suffered and died because of tobacco," said Wilmot, an assistant Democratic leader.
Health care advocates have also urged that a sizable portion of the money from the bond sales be used for health care.
The county will be spending $500,000 a year on a "Quit Line" to target young smokers.
The tobacco money will not be used to make up any deficit in the county's operating budget. A recent report by Mecca says that the county could run at an operating deficit ranging from $900,000 to $5.5 million, largely because of greater Medicaid costs.
The county would have to use money from a reserve fund and reduce expenditures.
"There is no sense of panic," said Mecca. "We are committed to stabilizing property taxes."