States Turning to Tobacco Money
COLUMBUS, Ohio (AP) - Faced with a ballooning budget deficit, Gov. Bob Taft has proposed borrowing $100 million of the state's share of the national tobacco settlement to balance the books.
His proposal has disappointed anti-smoking advocates who saw Taft as a strong voice for using the money on health-related programs.
Governors and lawmakers around the country have been turning to the tobacco money, part of a $206 billion national settlement in 1998, as budget deficits grow in the face of a downtown in the economy, made worse by the Sept. 11 terrorist attacks.
``The tobacco dollars can be used in any way the states see fit,'' said Lee Dixon, a Washington analyst with the National Conference on State Legislatures. ``The case can be made that the states are using the tobacco money to continue current services, and if they did not use tobacco money, they would have to eliminate some health programs.''
The National Conference of State Legislatures released a report in August showing that only 5 percent of tobacco settlement money was being used on smoking prevention. Some states used the settlement money to make up shortfalls in state budgets and fund programs that had nothing to do with smoking.
At least four other states have used the money in the past year to balance their budgets, and more are considering such a move. Anti-smoking groups are not happy.
``The current budget crunch that a lot of states are facing threatens to undermine all of the progress that's been made in funding effective programs to reduce tobacco use among children,'' said Matthew Myers, president of the Washington-based Campaign for Tobacco-Free Kids
``In the long run, diverting tobacco prevention money from the critically important goal of reducing the number of kids who start will be bad public health policy and bad for the state's treasury because of the cost of tobacco-related diseases,'' he said.
Taft defends his plan as a fiscally responsible approach to a serious budget crisis. He emphasizes that Ohio is borrowing tobacco money, not taking it permanently.
``We haven't considered that at this time, and we don't have any plans to consider that at this time,'' Taft said. ``But we certainly hope the situation doesn't get any worse than it is today.''
Within the past year:
-Michigan used $65 million to meet a revenue shortfall in its budget year that ended last month. The state was planning to use tobacco money before the terrorist attacks but the proposal wasn't as large, said Kelly Chesney, a state budget office spokeswoman.
-Tennesee spent $560 million of the tobacco settlement money - four years' worth - to balance the current budget.
-Wisconsin sold 25 years of payments from the state's settlement with tobacco companies - expected to total $5.9 billion - for $1.3 billion, with $450 million intended to immediately help balance this year's budget.
-Missouri's Gov. Bob Holden tapped $25 million in tobacco settlement funds that had been intended for a new state health laboratory.
Holden, a Democrat, didn't want to use the tobacco money, but the tightest budget in a decade forced his hand, said spokesman Jerry Nachtigal.
``To offset the potential state employee layoffs, cuts in education and law enforcement and protecting the most vulnerable in our state, the decision was made we had to dip into that fund, and hopefully that won't have to happen again,'' he said.
Missouri also used $127 million to meet a revenue deficit the 2000 and 2001 budget years. In 2000, Montana allocated $20 million in tobacco funds to balance the budget.
And both Hawaii and Florida lawmakers are to open special budget cutting sessions Monday in which, among other issues, they'll debate tapping a portion of tobacco settlement funds.
In Ohio, Taft's proposal is part of a broader proposal that includes budget cuts, the elimination of some sales tax exemptions and tapping a rainy day fund to deal with a $1.5 billion deficit that is being blamed in part on the attacks.
Lawmakers are cool to Taft's tax proposals and use of the rainy day fund, but they don't mind soaking up tobacco dollars.
``I'd rather spend tobacco money than rainy day money,'' said Senate President Richard Finan, a Cincinnati Republican.
Chris Schulte, spokeswoman for Tobacco-Free Ohio, said the group was disappointed Taft's proposal. ``Governor Taft was instrumental in getting $1.2 billion allocated for prevention, so we were surprised,'' she said.