Tobacco money transfer fails on initial vote; it deserves a closer look UPDATE | Arkansas Blog

Monday, May 1, 2017

Tobacco money transfer fails on initial vote; it deserves a closer look UPDATE

Posted By on Mon, May 1, 2017 at 5:09 PM

State Rep. Greg Leding just tweeted that a vote to transfer tobacco settlement money to a state reserve fund had failed in a legislative council vote.

I have no idea if this means problems long-term for the move, which is part of Gov. Asa Hutchinson's special session agenda. But I do know it deserves more attention because the transfer is a historic break with the initiated act passed in 2000 for spending millions from the nationwide settlement with tobacco companies over the health ills caused by cigarettes.

The money, according to law, is to be used only for programs related to health care services, health education and health-related research. I supplied the  emphasis. Hutchinson's legislation would strip the word "only." Big difference. The legislation would allow an open-ended transfer of tobacco money to reserves. It would  immediately transfer all of an unspecified amount in the fund currently to a state reserve fund. It currently holds $103 million.

Reason: To increase the state's bond rating. That in turn would lower the interest the state has to pay for bonds. What might it need to issue bonds for? To give as corporate welfare to industrial development prospects.  In short, the governor would convert money paid as damages for costs incurred for health costs for treating poor smokers to subsidies for  industrialists..

Timing is interesting. I recently received a news release from Attorney General Leslie Rutledge, not exactly claiming credit for the annual $50 million tobacco payment, but wrapping herself in its goodness. Her news release wrote:

Nearly 20 years ago, 46 states and numerous other jurisdictions entered into a historic, multibillion dollar agreement to settle consumer-protection lawsuits for the costs that they had incurred for treating the negative health effects of smoking.

“It is critical for me to continue enforcing the terms of the MSA agreement with the various tobacco companies,” said Attorney General Rutledge. “The money is used each year to conduct health care research, fund smoking cessation programs and improve the overall health of Arkansas residents. A large part of the money will also go to help fund the Arkansas Medicaid program, which is vital for some of our State’s most vulnerable families and children.”

This year’s disbursement of $50,523,025.47 brings the total amount received since 2001 to fund various public health programs in Arkansas to $947,255,651.

She has stood silent about the governor's raid on the money. Her news release continued:

The Attorney General is tasked with enforcing the tobacco statutes that were enacted pursuant to the MSA. This enforcement includes operation of a certification process for tobacco wholesalers and manufacturers, ongoing quarterly and annual reporting, maintaining an Approved-For-Sale Directory, conducting audits, collection of escrow amounts and investigation or even litigation should violations of the tobacco statutes occur.

In 2000, Arkansas voters created the Tobacco Settlement Act, which governs how the funds received under the settlement are used. Payments are placed into the Tobacco Settlement Program Fund for later distribution to the programs supported by the settlement payments, including the Arkansas Biosciences Institute, an agricultural and medical research consortium; the Medicaid Expansion Program, which provides Medicaid coverage for pregnant women and increases hospital benefits for Medicaid beneficiaries; the Prevention and Cessation Program, which aims to reduce tobacco use; and the Targeted State Needs Program, which includes support for public health programs for minorities, older Arkansans and residents of rural areas and the Delta.
Sen. Joyce Elliott chose today to look more broadly at the state's revenue picture. She sees the need for a money transfer as the unsurprising fallout from excessive tax cutting. The state just cut the budget $70 million because of tax revenue shortfalls.

So, yes, money must be taken from Peter to pay Paul.

She also distributed this tax report:

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