State considers tapping tobacco funds

0 Comments | Gazette, The (Colorado Springs), Mar 13, 2003 | by KYLE HENLEY

DENVER - Budget-conscious legislators are thinking about taking $60 million a year from a trust fund created by a national tobacco civil settlement.

State lawmakers have cut $809 million from the current budget and are putting together a budget for next year that is $870 million below the state government's needs. That situation turns the tobacco settlement fund into the ultimate cookie jar, a huge pool of money that can serve as collateral for a mega-loan.

Since the 1998 settlement, Colorado reaped more than $100 million a year and used the money for a variety of programs. A growing number of revenue-strapped states borrowed against their tobacco settlement money.

The strategy would go a long way toward solving Colorado's budget dilemma - but at a cost. At stake are programs funded by the $246 billion agreement reached with cigarette-makers and the attorneys general.

For example, smoking cessation programs would be cut.

Cancer treatments for low-income women would stop.

Read to Achieve, a popular literacy program for grade-school children, would see all funding dry up.

The concept of borrowing from the fund was introduced Wednesday at a meeting of the Joint Budget Committee, but the six-member panel that controls the state budget process postponed a vote on the measure after a possibly illegal, closed-door meeting.

The committee met privately in a back office. Legislative committees cannot meet secretly unless they are considering personnel or contractual matters, a lawsuit or the purchase or sale of real estate.

Budget committee chairman Sen. Dave Owen, R-Greeley, said he set up the backroom meeting because he knew the topic was controversial and he wanted to save time.

Taking a $200 million to $286 million loan against the settlement payments would stretch the money cut from Colorado's program even further.

The state spent about $72 million out of the fund last year to pay for eight programs. Of the eight, only two would survive the proposed cuts: a $17.5 million-a-year health care plan for low-income children and a $6.2 million visiting nurses program for young mothers.

The Child Basic Health Plan provides insurance to about 50,000 low- income children.

"I think that has been one of the sort of publicly subsidized health programs that people see as quite a success," said Karen Reinertson, head of the Department of Health Care Policy and Financing. "A lot of children who wouldn't have health insurance do now because of that program."

At least 10 other states have borrowed from the funds - including Arizona, California and Washington. New York and Missouri are considering it.

"I think states are looking at all sorts of options," said Judy Zelio, an analyst for the National Conference of State Legislatures. "Many of the tobacco funds were designated originally, when times were better, for certain kinds of health programs, and some states have looked at . . . having to postpone or suspend those programs."

CONTACT THE WRITER: (303) 837-0613 or khenley@gazette.com

THREATENED

Here is a list of programs that would be cut if legislators decide to use tobacco settlement trust fund money to balance the state budget:

Read to Achieve, an $18 million-a-year program that gives grants to schools to help second and third-grade students improve their literacy skills. Money has gone to 560 schools throughout Colorado, including six schools in Academy School District 20 and 11 schools in Colorado Springs School District 11.

The Comprehensive Primary and Preventive Car Program that gives $6 million a year in grants to health clinics to treat indigent patients.

The Breast and Cervical Cancer Treatment Fund, which sets aside $1.6 million to help women fight cancer.

The Tobacco and Substance Abuse Related Research Grant Program that gives $7.4 million to college and universities to study treatment, diagnosis and prevention of smoking-related diseases.

The Tobacco Education, Prevention and Cessation Grant Program that spends $15 million a year to get Colorado to kick smoking.