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Wednesday, February 19, 2003

Tobacco Fund a Burning Issue

By David Miles
Journal Capitol Bureau
    SANTA FE Anti-smoking advocates worry that Gov. Bill Richardson's proposal to eliminate the state's tobacco settlement permanent fund will jeopardize long-term funding for programs ranging from diabetes education to AIDS treatment.
    Richardson has vowed to keep paying for such programs at current levels. But the Democratic governor says he needs to use the permanent fund as a stopgap source of money to offset escalating costs of the state's Medicaid program.
    With many lawmakers in the House also cool to Richardson's proposal, the issue has become one of the more contentious of this session.
    "It's totally appropriate for settlement dollars to go to Medicaid, just not all of them," said Linda Siegle, a lobbyist for the American Cancer Society and the American Heart Association.
    The two groups are part of New Mexicans Concerned about Tobacco, which earlier this month launched a print and radio ad campaign urging New Mexicans to lobby legislators to oppose any diversion of tobacco settlement funds to the state's general fund.
    Radio and print ads now running in Albuquerque and Santa Fe support raising taxes on cigarettes by 60 cents a pack to offset Medicaid costs.
Medicaid vs. programs
    New Mexico expects to receive $1.1 billion by the 2025 budget year as its share of a $206 billion settlement that 46 states reached with tobacco companies in 1998. The settlement was reached after extended multistate litigation to recoup the cost of medical care for people with tobacco-related illnesses.
    The state expects to receive nearly $43 million in tobacco settlement funds this fiscal year, which ends June 30.
    Under a 1999 state law, half the money flows into an interest-earning permanent fund while the other half is deposited in the tobacco settlement program fund.
    The law allowed legislators to spend money from the program fund on health care and education, including public schools, research on smoking-related diseases and tobacco-use cessation and prevention programs.
    Anti-smoking advocates contend that the program funds some now go to programs dealing with diabetes and other health issues should be used chiefly to combat tobacco use and tobacco-related diseases.
    Richardson argues the tobacco settlement permanent fund should be available for Medicaid spending.
    Siegle said that if legislators do not alter the tobacco settlement permanent fund or contributions to it, interest earned on the balance would be sufficient after 20 years to indefinitely sustain programs currently paid for by the tobacco settlement program fund.
    Richardson is quick to note that his proposal to spend the estimated $57 million currently in the permanent fund on Medicaid would generate nearly $180 million in federal matching funds.
    "The poor in this state need access to that money, and we should take these steps like many other states have," Richardson said this week.
Getting rid of fund
    In addition to proposing to eliminate the tobacco settlement permanent fund and transfer its balances into the state's general fund for Medicaid, Richardson wants to abolish the tobacco program fund and divert future contributions to the general fund.
    The governor's budget proposal calls for using state general fund dollars to keep paying for most of the programs funded by tobacco settlement dollars at current spending levels.
    But Siegle said the state should be spending much more on tobacco-use cessation and prevention programs. She noted that the state currently spends $5 million a year on such programs, which is nearly $9 million less than the Centers for Disease Control and Prevention's minimum annual spending recommendation for New Mexico.
    "When you spend more, you get more of an impact," Siegle said.
    Former House Speaker Raymond Sanchez, an Albuquerque Democrat who sponsored the 1999 legislation creating the tobacco settlement permanent fund, said he understands Richardson's desire to find funding wherever possible.
    But Sanchez, now an attorney and lobbyist, objected to Richardson's proposed elimination of the permanent fund and expressed concern about using that money to temporarily offset recurring Medicaid costs.
    "If you wipe this all out at one time, what are you going to use in subsequent years?" Sanchez asked.
Willing to compromise
    So far, Richardson's proposals to spend tobacco settlement money have met with a mixed reaction from legislators.
    The state Senate this month narrowly approved a bill (SB 298) sought by Richardson to abolish the tobacco settlement permanent fund and transfer its balance into the state's general fund. The measure also would abolish the state's tobacco settlement program fund and divert future contributions to the general fund.
    But the House Consumer and Public Affairs Committee has tabled a similar measure (HB 244) and a bill (HB 262) to make the state's future tobacco settlement revenues available to spend on Medicaid and other state programs.
    Rep. Gail Beam, an Albuquerque Democrat and committee chairwoman, said she opposes the elimination of the permanent fund and would like to include a sunset provision to end any diversion of tobacco settlement revenues after no more than two years.
    But Beam also said she has been negotiating with Richardson over legislation to tap into the state's tobacco settlement funds.
    "I would want to reach an agreement with the governor before I would let it out of my committee," Beam said.
    Richardson has expressed a similar willingness to make a deal.
    "I'm ready to work with the House members on a compromise on the tobacco settlement," Richardson said.