Virginia to cash in tobacco settlement
RICHMOND, Va. - Virginia will cash in part of its share of the National Tobacco Settlement at the end of this month in a transaction that will create a $600 million windfall for economic development projects in rural areas.
Virginia Finance Secretary John Bennett told the Tobacco Indemnification and Community Revitalization Commission on Tuesday that bidding on the promissory notes from the legal settlement will take place March 18-20 with the sale closing occurring April 3.
During Tuesday's meeting at the state capitol, Gov. Mark R. Warner also urged members of the tobacco commission to hire a senior finance manager to oversee the disbursement of the settlement funds.
"I feel this is the single-best shot to rebuild these (rural) economies for the future," Warner said. "You're talking about a $600 million investment. That's an enormous responsibility."
He also urged the panel to funnel the funds to projects that will benefit all of Southside and Southwest Virginia, not simply select localities.
His comments generally drew agreement from those gathered, including state Sen. Charles Hawkins, R-Pittsylvania County, the commission's chairman.
"Once securitization starts, we need to make sure there is a mechanism in place to put these monies in the best possible position for long-term usage," Hawkins said. "In the past, we've been dealing with monies that have been allocated on a year-to-year basis, and we've tried to work with localities. Now we're getting into the second phase, and we need to make sure there is an understanding that these monies are invested in a way that meets certain criteria."
To help ensure a broad, regional vision, Warner suggested requiring communities that apply for economic development grants to adopt specific, measurable goals set by the tobacco commission.
"One route the commission could take is simply saying, 'We're going to continue to allocate on a jurisdictional basis to meet jurisdictional needs,'" he said. "Another approach might be to say, 'We will look at the region as a whole and ... want to raise the overall educational standards of the region over the next decade. We're going to ask that if you want to get the sewer and water money or the economic closing funds money ... you as a jurisdiction ought to have in place a 10-year education plan that's going to raise the overall education standards."
During the discussion, Sen. William Wampler, R-Bristol, reminded the panel not to abandon its policy of compensating tobacco growers and quota holder for lost income due to the decline of the tobacco industry.
Securitization has been a buzzword in rural politics for more than two years.
Under the legal agreement between the major cigarette companies and 46 states, Virginia is receiving more than $4 billion over 25 years.
The General Assembly has divided the money three ways - 10 percent for anti-smoking programs, 40 percent for the annual budget's general fund and 50 percent for rural Virginia.
The tobacco commission controls rural Virginia's share and uses it to compensate leaf growers and to fund economic development projects in tobacco-dependent communities.
By selling half the promissory notes on the bond market at a discounted price, the commission can reap more than $600 million and immediately begin investing in education and infrastructure projects in Southside and Southwest Virginia.
Though the tobacco commission controls the disbursement of the money, the actual sale of the promissory notes will be handled by the Tobacco Settlement Financing Corporation.
Warner announced five appointments to that board on Tuesday, including Suzanne Bachman of Richmond, Martinsville City Councilman Joseph R. Cobb, Jerry B. Flowers III of Courtland, former CSX executive David D. Owen of Richmond and retired Gate City banker Jo Penley.