Tobacco funding may help education, health care

Published 12:00 am Saturday, April 28, 2001

FERRIDAY, La. – A bill allowing the state to sell up to 40 percent of its settlement with tobacco companies will yield money for education and health care while lessening the state’s financial risk, the bill’s sponsor said Thursday.

That is how Rep. Bryant Hammett, D-Ferriday, sees it – and that is how he is pitching the bill to other lawmakers.

He acknowledges that legislators still have many questions about the bill’s details.

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&uot;It’s like an individual investor,&uot; Hammett said. &uot;You don’t put all your money into any one thing – and I&160;don’t think it’s wise for the state to do so, either.&uot;

In 1998, tobacco companies agreed to pay a $4 billion settlement to the State of Louisiana over 25 years.

However, Hammett’s bill would allow the state to sell up to 40 percent of that settlement to large investors.

The money would go into the Millennium Trust Fund. The state could only spend the interest from that money, and only for education, health care and the TOPS scholarship program.

The remaining 60 percent of the tobacco settlement would still be paid to the state over 25 years.

But those payments are dependent on tobacco companies’ revenues continuing at least at the current level.

And if the number of smokers decreases, revenues could also decrease.

&uot;So it’s kind of a safe avenue to go ahead and securitize a portion of it,&uot; Hammett said. &uot;The philosophy behind this is that it’s better to go ahead and hedge your bets.&uot;

The House Ways and Means Committee, of which Hammett is chairman, passed the bill on Tuesday.

As of Friday afternoon the measure, House Bill 1260, was pending on the House floor.