Tobacco Settlement May Be Used To Help Budget
DENVER -- Colorado lawmakers say they will look at plans to sell part of the state's $2.9 billion national tobacco case settlement to plug part of the current $400 million hole in the state budget.
Members on the state's budget panel Tuesday confirmed they will review those proposals.
The plan could jeopardize $75 million in health and reading programs for poor children funded with tobacco dollars, but it also could save taxpayer-funded state programs and avoid layoffs for now. The impact on programs is not yet known.
"We'll look at all possibilities," said Sen. Peggy Reeves, Democratic vice chairwoman of the Joint Budget Committee, which would make the recommendation to the full legislature. "I have a feeling that what we'll end up needing to do is cut tobacco-funded programs. You can't keep scaling back everything and make it work."
Representatives of the American Cancer Society and heart and lung associations strongly oppose diverting money from tobacco-related health care programs.
"The current education, cessation and prevention programs don't even meet current requirements. We would hope the funding would continue," said Michelle Holbrook, director of government relations for the Rocky Mountain Division of the American Cancer Society.
Others oppose using the plan because it won't solve any of the problems from declining tax income.
Gov. Bill Owens' chief economist, Nancy McCallin, said she worries that Colorado would get in the same fiscal predicament again unless the economy makes a quick and strong rebound.
Nevertheless, if the legislature approves such a plan and the governor agrees, Colorado will join South Carolina, Missouri, California and a growing list of states that are eyeing their tobacco settlements as a quick fix.
Under plans that other states have used, Colorado would sell to investors a portion of expected tobacco revenues in the form of bonds. The state expects to get $100 million a year for nearly 30 years, but would have to sell several years' worth of income to generate the money to balance the budget.
Dozens of states sued major U.S. tobacco companies in the 1980s to recoup damages for smoking-related illnesses. In 1998, the states signed the settlement agreement with the tobacco industry.
Colorado will receive $103.7 million this year for its share of the settlement and about $75 million is earmarked for programs, including $19 million for visiting nurse programs.