Wisconsin Budget Fix Would Wipe Out State's Entire Tobacco Settlement
www.CNSNews.com - Madison, Wis. (CNSNews.com) - How bad are budget deficits in state capitals around America? Wisconsin's Legislature, which last year agreed to trade almost $6 billion the state would have received over 25 years in tobacco settlement mone
The tobacco settlement was originally intended to help states offset the medical costs related to the treatment of smoking-related sicknesses in people who are uninsured.
But the current state financing plan, as written, would make Wisconsin the first state to spend its share of the tobacco endowment, stemming from the 1998 agreement reached between the tobacco industry and 46 states, on a single budget.
"It's a tragedy, it's an embarrassment and it makes me sick," said State Rep. Sheldon Wasserman, a Milwaukee Democrat and physician whose father died from smoking-related problems.
The budget repair bill to fill the $1.1 billion deficit passed the Republican-controlled state Assembly this week by a vote of 50-47. Forty-two Democrats and five Republicans opposed the package. The reverse happened in the Democratic-controlled Senate on July 3 when the bill passed 17-16, with all 15 Republicans plus Milwaukee Democratic state Sen. Gary George casting the no votes. George is also running for governor.
McCallum, who took over as governor when Tommy Thompson was named the nation's secretary of health and human services, said the budget is "not perfect" but not all bad either.
"It also is important to note that the budget was balanced without raising taxes," McCallum said. "When I unveiled this budget, I said we would not balance this budget on the backs of the hard-working men and women of this state. And we didn't."
Republican state Rep. Steven Nass, one of the five GOP members to oppose the plan in the Assembly, sees a different future than the one painted by McCallum, whose performance so far as governor has inspired four Democrats and one Libertarian, Thompson's brother Ed Thompson, to file gubernatorial candidacy papers.
"If the Legislature could not seriously cut government spending this time, the stage is set for potentially massive tax increases to be passed in 2003," Nass said. "State officials know that the Conference Committee Budget Repair Bill will be poorly received
by national bond rating firms and investors. The long-term stability of the state budget and economy is threatened by the lack of any realistic reductions in government spending."
It took 30 years and 150,000 Wisconsin deaths to reach a tobacco settlement, said Wisconsin Medical Society President Dr. Mark Andrew, and only one Legislature and governor to spend it all. "What a sad distinction it is to be the only state in the nation to cash in its entire tobacco settlement payment for deficit reduction."
As part of that landmark 1998 settlement, the tobacco industry agreed to pay $206 billion to the states to cover taxpayer dollars spent on care for patients with cancer and other illnesses related to smoking. Wisconsin's share was to have been $5.9 billion paid over roughly 25 years.
Instead, McCallum and the Legislature last year sold the future checks for a lump one-time payment of about $1.3 billion. The original plan was to use a portion now and place the remaining dollars in a trust fund. However, that strategy was abandoned once the deficit surfaced.
Wisconsin officials blame the deficit on the recession and the fallout from the Sept. 11 terrorist attacks. Others point to the politically popular move to return a $700 million state surplus to taxpayers as a factor. Adds Democratic state Rep. Tim Carpenter: "It's this type of credit card mentality that got us where we are today and its no wonder the bond-rating houses such as Standard Poor's have downgraded Wisconsin's rating from AA to AA-minus."
The National Conference of State Legislatures indicates other states have also sold future tobacco payments, but to date none has spent all of the profits on a single state budget.
"The long-term ramifications of this decision are unimaginable," said Penny Siewert, the chairman of the board at the American Lung Association of Wisconsin. "The tobacco industry must be celebrating."
William V. Corr, the executive vice president of the Campaign for Tobacco-Free Kids, labeled the actions of Wisconsin lawmakers, "incredibly shortsighted.
"Tobacco's toll in Wisconsin is devastating - 33 percent of youths currently smoke, and 16,700 more kids become regular, daily smokers every year, one-third of whom die prematurely," Corr said. "Smoking-caused health care expenses and productive losses cost Wisconsin nearly $3 billion per year."
Adding to the tension in the Capitol, where partisan gridlock and sniping have become the rule, is the fact that this is also election year in Wisconsin. New legislative districts have just been mapped.
"Anybody who claims that this plan is fiscally responsible should have his or her head examined," Wasserman said. "The voters are watching and their memories are long."