Puff the Magic Money Source

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Smokers are addicts who won’t quit even though they know that – in the long run – the activity will be bad for them.

Governments that use smoking money won’t quit even though… deep down… they know that using the cash isn’t good for them. This comes to mind as Monroe County, once again, made use of the tobacco settlement money as a revenue source for its budget.

Can you compare a smoking addiction to the continual use of tobacco cash to balance budgets? On some levels – that’s probably unfair. After all, county government budget planners in this state have to deal with a serious and difficult financial squeeze being put on them by state mandates. Who would blame them for trying to alleviate those pressures.

But there are other levels where the comparison may make some sense.

Here’s what I mean.

While society has demonized cigarette use, smoking still isn’t illegal (although you better find a cave these days to do it in or maybe move to Greece).You probably know a smoker in your life. That person probably tells you how they ought to quit puffing away… but the person keeps lighting up anyway. Surely you’ve heard some, or all, or the reasons why.

The interesting reason for me is to alleviate stress… to deal with pain.

That brings us to the smoking money – more specifically the proceeds gained by governments of all sorts through the lawsuit against tobacco companies charged with covering up the ill-effects of smoking. Back in the late 1990’s, tobacco companies settled their legal action with some 40 state attorneys general (including one in the Empire State who wants to be our next governor.

In New York, counties were going to get a piece of that tobacco money action. Monroe County’s would be gaining something like $760 million in annual payments over decades. But rather than taking that money over the long haul, the county entered into an arrangement that would give it cash up front, although far less than what they might have gotten over time.

That added up to about $142 million. Monroe County officials at the time had some very high-minded ideas for its use. Pay off old debts. Pay off building a new county jail expansion. Put aside some for a planned juvenile justice center.

But then came 2003, when the county’s budget began tightening up. So then-County Executive Jack Doyle turned to that settlement money. He used some of those proceeds to… well… to fill a hole in the budget (a City Newspaper article from that time laid it out nicely).

Consider this the first big drag off that tobacco fund money. Soon the term "securitization" found its way into county budget conversations. A county created board – the Monroe Tobacco Asset Securitization Corp. – was empowered to make decisions on selling bonds on the open market based on what the county would get down the line from the tobacco settlement fund. And boy, have there been buyers.

Last year, County Executive Maggie Brooks grabbed $51 million from the "securitization" of tobacco settlement money. That was used to help fill a budget gap. Then this month we see once again how the county wants millions from the tobacco settlement. Once again to help cover projected budget shortfalls.

So what’s the problem? Using tobacco settlement money for a government budget isn’t illegal. Neither is repeated use of the funds. And sucking down the money now for the budget isn’t the same as sucking down cigarette smoke. No, not in the sense that it is eroding health.

But this "securitization" is doing something to deal with anxiety… to deal with pain. Basically it’s putting off the anxiety by putting off that pain.

The tobacco settlement cash fills in budget divots while never addressing the systemic problems that are causing this county government to continually find itself with shortfalls. The tobacco cash seemingly helps put off nasty decisions. Use it now and you don’t have to pull from some place else (like the wallets of taxpayers or the budget of county services).

Understand, however, that the tobacco settlement "securitization" means that Monroe County (and the many other governments that do this) is getting cents on the dollar. So it’s something like a quick fix – akin to that 10 minutes puffing away.

Meanwhile it has been more than three years since the Blue Ribbon Commission on Monroe County Finance issued its report on county fiscal troubles. More than three years since the crystal clear warnings in that report – that Monroe County has to readjust itself on a fundamental level.

Monroe County leaders have talked about the need for this fundamental change. The latest came when Brooks announced that in 90 days she would issue a plan for dealing with the budget problems down the road. Will it feature concrete proposals? It needs to. Will it mean that the county will begin hammering away not only on internal financial problems… but on a state government that is leaning too heavily on it? It should.

Why is it taking so long? Well, the quick fix still remains.

Let’s hope this is the year that county government stops talking like the smoker who says they are going to quit… really soon.

Because you know what the doctor says in reply – the clock is ticking.

No, the tobacco settlement money isn’t a direct cause of ill-health.

Just the fact that by using it, the county delays getting at the problems that are eroding fiscal stability.

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