Tobacco-Cash Bill Lets Voters Decide
To ensure Orange County voters can decide in November how to spend the county's tobacco settlement dollars, state Sen. Joe Dunn introduced legislation Wednesday to block county supervisors from committing the money this summer for other purposes.
The measure would bar any local jurisdiction from encumbering tobacco settlement funds after signatures had been filed in support of a ballot measure on using them. The prohibition would take effect the date signatures are filed with a clerk or registrar of voters, and would end after Election Day.
A coalition of Orange County health care advocates on May 17 filed more than 115,000 signatures in support of a proposed November ballot measure that would direct 80% of the $30 million in annual installments from the national tobacco settlement, with the remainder going to law enforcement. Dunn (D-Santa Ana) is a sponsor of the proposed initiative.
But the Board of Supervisors is considering selling the rights to those first 25 years of annual installments on Wall Street in exchange for an immediate cash payment of $350 million to $400 million.
Such a financial deal, called securitization, has been favored by a majority of the five supervisors, as part of their plan to spend at least half the tobacco funds on jail expansion and paying down the county's bankruptcy debt.
Coalition members are worried that supervisors would strike a deal this summer to securitize the tobacco funds, making moot the anticipated November vote on their proposed initiative.
Chief Financial Officer Gary Burton, who drew up the securitization and jail financing plan, said it would be up to the Board of Supervisors "to decide whether to oppose or agree with the bill."
Supervisor Tom Wilson, who had not seen the measure, said he supports Dunn's bill in concept as a way to preserve voters' right to decide certain issues by referendum.
Supervisor Chuck Smith said he opposes it, calling it "a case where the state is attempting to control what is happening in the county. That should be up to local control."
Smith said securitization protects the county by guaranteeing a large cash payment upfront, regardless of whether tobacco companies declare bankruptcy, reorganize or engage in other maneuvers to reduce or avoid settlement payments.
Supervisors Cynthia Coad, Jim Silva and Todd Spitzer could not be reached for comment.
The measure is another move in a year-long chess match between county officials and a coalition of health care advocates to determine how the county should spend an estimated $765 million it will receive in the first 25 years of payments under the national tobacco settlement.
The exact amount the county would get by securitizing would depend on interest rates and whether the bonds were tax exempt, Burton said.
The county plan also calls for spending about $150 million of the proceeds on jail construction and using the rest for debt reduction, with a portion for health care and other county needs, Burton said.
Dunn said his measure would ensure the voters' decision in November is not ignored.
"It doesn't interfere with local control," he said. "It is the essence of local control since it is the citizens of Orange County who are making this decision."
The health care coalition supporting the initiative includes doctors, hospitals, the AARP and community clinics. A spokeswoman for the county Registrar of Voters said Wednesday that her office is halfway through a random check of petitions, and she expects the petitions will have more than the required 71,206 valid signatures to qualify for the ballot. The count will be done next week.
The California Medical Assn., which backs the initiative, endorsed the bill.
"Anybody should back it who believes in democracy," CMA Vice President Steve Thompson said. "Elected officials should wait 'til the public decides whether they want the money spent on health care. If they don't, then the supervisors can go ahead. A few months to wait won't kill their proposal."
Dunn anticipated the measure would win backing from Orange County legislators. A majority have endorsed the initiative and others would be expected to back voters' constitutional right to have key issues settled by ballot initiative, he said.
A spokesman in Gov. Gray Davis's office said he did not have a position on the measure.