Thursday, October 07, 1999
Taft has caution on using windfall
Deters wants tobacco money now
BY HOWARD WILKINSON
The Cincinnati Enquirer
Ohio Gov. Bob Taft said Wednesday he can't buy into Ohio Treasurer Joseph Deters' idea for collecting Ohio's $10 billion share of the tobacco settlement now rather than later.
“It's a little scary to me to have that kind of money sitting around in an account,” Mr. Taft told The Cincinnati Enquirer editorial board Wednesday. “It concerns me as to who would want to spend it.”
Over the next 10 years, Mr. Taft wants to spend about $2.4 billion of Ohio's share of the settlement of the suit against tobacco manufacturers on building and upgrading public school buildings. It would be part of a 12-year, $10 billion school building plan.
As it stands now, the tobacco industry will pay Ohio in installments over 25 years, with the money going into the state treasury until the Ohio General Assembly decides what to do with it.
The Deters plan
But last month, Mr. Deters suggested that the state sell its tobacco settlement award to private investors for a lump-sum payment. He argues that the investors, instead of state government, would take the risk that, somewhere down the line, the tobacco companies would no longer be able to afford payments to states.
That way, Mr. Deters argued, the state could have the money now instead of later and not have to be concerned about the long-term financial viability of the tobacco industry.
But Mr. Taft said he does not think the tobacco companies will fail to meet their commitments under the settlement.
“I think the money's pretty solid, at least for the next 10 to 12 years,” Mr. Taft said.
Mr. Taft has appointed a task force to suggest how the state's share of the tobacco settlement should be spent. Wednesday, the task force recommended to the governor and legislative leaders that $4.5 billion be used for school construction and improvements over 26 years.
Another $4.3 billion, the task force recommended, would be spent through 2025 on a variety of health programs, including a smoking cessation program, and biomedical research.
The task force also recommended $229 million be spent over the next 12 years to help Ohio farmers hurt by reductions in tobacco production.
Wants bond authority
The tobacco settlement money, the governor said Wednesday, “is going to enable us to rebuild Ohio's schools without increasing taxes.”
Mr. Taft also said Wednesday he will campaign hard over the next month for passage of Issue 1, the only statewide initiative on the ballot this year.
Issue 1 would permit the state to issue general obligation bonds for repair and construction of schools and colleges and universities.
“The bonds would save taxpayers money by allowing the state to borrow at a lower rate,” Mr. Taft said.
Scott Pullins, executive director of the National Taxpayers Union of Ohio, has come out against Issue 1, a stance that has left the governor bewildered.
“I have no idea what Scott Pullins is thinking,” Mr. Taft said. “This is good for the taxpayers.”
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