State reinvests in tobacco companies after restriction lifted
TALLAHASSEE, Fla. (AP) -- The state has invested $352.4 million in tobacco and tobacco related companies over the past month now that state officials lifted a ban on such holdings.
Four years ago the state dumped about $900 million in tobacco stocks from the pension fund that covers nearly 800,000 state and local employees.
But last month Gov. Jeb Bush, Comptroller Bob Milligan and Treasurer Tom Gallagher, who manage the $100 billion fund, unanimously voted to allow the state to invest in tobacco again.
State Board of Administration records show the state jumped at the chance of investing in tobacco companies, purchasing about $271 million in Philip Morris stocks and investing $36 million in Loews Corp., which owns the Lorillard tobacco company, the Tallahassee Democrat reported in Sunday's additions.
Anti-smoking advocates said they were disappointed in the investments and felt they were misled by pension fund managers, who said they wanted the ban lifted so they could have more freedom in planning the fund's future.
''They got back into tobacco stocks very quickly and with extreme prejudice,'' said Patrick Kennedy, spokesman for a coalition which includes the American Heart Association, the Lung Association of Florida and the Cancer Society of Florida.
Tom Herndon, the executive director of the Board of Administration, said he never promised not to invest in tobacco.
''The idea was always: 'You give us the green light and we'll move as quickly as we can and as rationally as we can,''' Herndon said. ''We think we've done that.''
The stocks are a fraction of the $55 billion in domestic stocks the state owns, Herndon said.
The state had dumped its tobacco stock as the industry faced multiplying state lawsuits over the costs to treat sick smokers.
Florida settled its lawsuit with cigarette makers just three months later. The value of that settlement is estimated to be worth about $13 billion over 25 years.
State union officials, who opposed the 1997 divestiture, lauded the investment decision as a way to make sure the pension fund continues to grow.
''This isn't about wanting people to smoke we don't want people to smoke,'' said Mark Neimeiser, lobbyist for the American Federation of State, County and Municipal Employees. ''We want people to have money to retire and enjoy life.''