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Gov. Gets Free Travel From 'spit' Tobacco Industry

By Jeff Jones
Copyright 2006 Albuquerque Journal; Journal Politics Writer
    Gov. Bill Richardson has taken tens of thousands of dollars worth of free corporate jet flights from the world's largest smokeless-tobacco company in his role as head of the Democratic Governors Association.
    That company— UST, the parent corporation of the firm that makes Skoal, Copenhagen and other brands— lobbied hard at the New Mexico Legislature earlier this year for a tobacco-tax change that critics said would have exclusively benefited UST.
    The bill, sponsored by Richardson's chief legislative ally, House Speaker Ben Lujan, passed the House after a state financial impact report to lawmakers was drastically changed using UST's numbers. The measure ran out of steam in the Senate, where it died.
    "We called it a sweetheart deal for UST," said Cheryl Ferguson, spokeswoman for the New Mexicans Concerned About Tobacco coalition. "They control almost three-quarters of the spit tobacco market. They are the big dog on the porch, if you will."
    Richardson spokesman Pahl Shipley said Friday the governor was never briefed on Lujan's tobacco-tax bill and had no position on it. In an earlier interview, he said Richardson's DGA travel arrangements have had absolutely no influence on the governor's policy decisions.
    "There's no strings attached," Shipley said. "The governor always puts the best interests of New Mexico first."
    Lujan, D-Santa Fe, defended the tobacco-tax bill and said he never asked Richardson whether he supported the measure.
    "I don't go to Gov. Richardson for all my legislation," Lujan said in an interview last week. "We have our own bills we look at."
    The five free UST flights provided for Richardson through the DGA in 2005 and early 2006 were worth more than $40,000, a Journal review of DGA records shows. The value placed on corporate jet travel for elected officials typically doesn't come close to the actual cost.
    On one trip through the DGA last spring, Richardson and then state budget czar James Jimenez conducted state business in New York City courtesy of $12,298 worth of air travel provided by UST.
    Advance America, the nation's largest payday loan company, with a keen interest in regulations and proposed legislation in New Mexico, also has provided jet travel for Richardson through the DGA.
    Shipley said Richardson tries to "get things done for New Mexico" whenever possible while on his DGA trips. He said the April 2005 UST trip to the Big Apple— in which Richardson and Jimenez met with bond-rating companies— saved the state travel money.
    "The DGA arranges the travel for these trips, which are completely legitimate, legal and are in no way political gifts," Shipley said. "Not only was the (New York) trip appropriate, Gov. Richardson also was able to accomplish significant state business at no cost to taxpayers."
    Mike Bazinet, spokesman for Connecticut-based UST, said the company doesn't solicit jet trips for politicians— rather, it responds to requests for travel.
    "In this case, the request comes from the DGA," Bazinet said in a recent telephone interview.
    Bazinet said his company doesn't discuss specific flights but said in most cases in which the company ferries a politico, a UST lobbyist is along for the ride.
    "We certainly have flown people from both political parties," Bazinet said. "As a practical matter, these are busy lawmakers— or executives, in this case. This is a courtesy that's extended."
Tobacco tax
    Chewing tobacco in New Mexico is taxed at 25 percent of the manufacturer's price, meaning higher-priced products such as Skoal and Copenhagen are taxed more than budget brands.
    Lujan's bill would have linked the tax to weight, meaning a budget brand of the same weight would have carried the same tax as a can of Skoal.
    Cigarettes in New Mexico are taxed at 91 cents a pack, regardless of price.
Two sets of numbers
    An initial fiscal impact estimate from the state Taxation and Revenue Department dated Feb. 3 said Lujan's bill would mean a $500,000 reduction in the amount of tobacco tax collected by the state.
    However, a second state financial impact report released a week later estimated the state would bring in an extra $300,000-plus if the measure were approved. That report cited numbers provided by UST.
    Lujan's bill passed the House on a 48-13 vote a few days after the second report.
    New Mexicans Concerned About Tobacco, a coalition made up of several groups including the American Heart Association, American Cancer Society and American Lung Association, fought the bill.
    Ferguson, the group's spokeswoman, said the measure amounted to a "huge tax cut" for UST and said the drastic change in the bill's estimated fiscal impact "smells a little weird to me."
    Tom Clifford, chief economist for Taxation and Revenue, said the first analysis was based on bad numbers. He said the second report provided the best snapshot and that politics played no role.
    Clifford said it's not unusual to use industry numbers in a state fiscal analysis.
    "We think this was much more accurate than what we had to start with," Clifford said.
    Lujan, the bill's sponsor, said the intent behind the bill was to level the playing field.
    "The reason I decided to sponsor it is, we (have) some cheap chewing tobacco that has been offered in the stores— and it's much cheaper because of the way that we tax snuff," Lujan said. "A lot of the children tend to buy that cheaper stuff. To me, it was a health issue."
    State law prohibits the sale of any tobacco products to youths under age 18.
    Ferguson disputed Lujan's claim, saying studies have shown that Copenhagen and Skoal— the latter comes in flavors including peach, apple, berry, cherry and vanilla— are the preferred brands for youths.
    State records show UST has four registered lobbyists for New Mexico: Joe Thompson, Philip Larragoite, James O'Neill and Robert Eric Donaldson.
    Bazinet acknowledged the change in New Mexico's tobacco tax would benefit UST.
    "There's no question about it," he said. But he argued that taxing chew by its price doesn't make sense.
    "More and more of the lower-priced product is being sold," he said. "That's what the state is subsidizing."
Donated travel
    Richardson has chaired the Washington, D.C.-based Democratic Governors Association since late 2004 and makes frequent out-of-state trips on DGA business.
    The Journal review of DGA contribution records shows UST, which has corporate aircraft, donated $16,293 in travel to the DGA in the first three months of this year and $24,337 in 2005. The donations came on five separate dates.
    UST donated nearly $63,000 to the Democratic Governors Association in 2004, with at least half in the form of travel.
    DGA spokesman Jon Summers in an April interview said UST provided the aircraft for Richardson to attend a DGA meeting in late February in Washington, D.C.
    The governor's office typically issues a news release when Richardson leaves New Mexico on DGA-related business, and it made such an announcement on Feb 24.
    A governor's news release at the time of last April's New York trip outlined Richardson's meetings with bond agencies on behalf of the state but made no mention of any DGA business.
    The other three UST travel donations to Richardson through the DGA were logged in on Feb. 28, 2005, March 1, 2005, and Sept. 21, 2005. They correspond roughly with two other Richardson trips announced by the governor's office: one for a National Governors Conference winter meeting, another for a DGA fall policy conference and his address at a business and government ethics conference.
    "The DGA arranges ... travel in relation to business for a number of governors," Summers said. "These are all legitimate trips made on behalf of the organization. We strictly adhere to all federal reporting and disclosure requirements."