Wisconsin Typical Of State Tobacco Settlement Debate

WASHINGTON – Wisconsin’s debate over the tobacco windfall has come down to short-term tax relief vs. long-term preventive health care. Those who favor tax relief want the money put into the general fund. Health care advocates, including lawmakers with medical backgrounds, are pushing for $50 million a year to be put into a health trust fund for the life of the settlement.

Worth $206 billion, the tobacco settlement will provide payments to 46 states, five commonwealths and territories and the District of Columbia over the next 26 years based on a formula developed by the state attorneys general who negotiated it. Four other states Florida, Minnesota, Mississippi, and Texasindividually settled with the tobacco industry for more than $40 billion.

In Wisconsin, longtime Republican governor Tommy Thompson, holds most of the cards on how the money will be spent because of his popularity and his powerful veto authority. He established the mainstream Republican position in February when he proposed using Wisconsin’s first installment of the tobacco settlement — $338.6 million by mid-2001 — into the state’s $21.6 billion 1999-2001 general fund budget.

“Because the state incurs major expenses in health care and health insurance costs due to smoking-related illnesses — costs which are paid by all state taxpayers — the payments will be deposited in the general fund as a general revenue for state use,” said Thompson’s budget briefing documents, which were released in February. “The tobacco settlement funds will help the state fund the costs of new or expanded health initiatives and several smoking prevention initiatives.”

Thompson proposes spending $207.2 million on various health programs over the next two years; the rest would be used to help pay for Thompson’s $300 million middle-class tax cut package.

Budget watchdogs say the tobacco money is part of the reason Wisconsin is on track to spend more than it’s raising in taxes. “With a closing balance of just $5 million net (in mid-2001), it is fair to say the proposed budget is balanced with tobacco dollars,” writes Todd Berry, president of the Wisconsin Taxpayers Alliance in a recent analysis.

He notes that state general purpose revenue (GPR) spending is proposed to grow 9.7 percent during the coming budget cycle — July 1, 1999 to June 30, 2001 — while GPR taxes would rise just 4.7 percent.

Democratic Attorney General James Doyle, whose office helped obtain the settlement, countered Thompson’s proposal by saying the state would lose a “once-in-a-lifetime opportunity if the money went into the general revenue stream.

“If we let it get into the revenue stream of the state, we’ll never get it back,” Doyle said in March before a state Senate committee.

Doyle, who may run for governor in 2002 if Thompson leaves office as expected, said the focus should be on smoking-related programs. He wants to set aside up to $65 million annually to refund taxpayers for Medicaid costs. He would put the rest in a trust to help combat smoking.

Legislative Democrats are using a variation on that theme in mobilizing behind a bill that is attracting significant bipartisan support.

Leading the effort is freshman Democratic state Sen. Judith Robson, a former geriatric nurse.

Robson announced late last week that 48 groups — including the American Cancer Society, the State Medical Society and politically influential unions were backing the bill. With 52 lawmakers also behind it — 37 in the 99-member Assembly, and 15 in the 33-member state Senate she claimed momentum is building.

Democrats hold a narrow majority in the state Senate. Republicans hold the edge in the Assembly. But the debate is crossing party lines.

Backers of the Robson bill include some key Republicans who sit on the Legislature’s powerful budget review committee, the Joint Finance Committee. The Assembly lead sponsor is Republican state Rep. Frank Urban, a retired physician.

Under the Robson-Urban bill, $50 million a year would be put into a segregated fund for a competitive grant program. An 18-member independent board (including elected officials, students, representatives of anti-smoking groups and health professionals) would develop and administer the grant program.

Grants would go to a wide range of projects including school-based smoking prevention programs, scientific research on tobacco-related cancer prevents and media campaigns to promote tobacco use prevention and cessation.

One conservative Republican, Rep. Glenn Grothman, questions how so much money can be spent on anti-smoking programs. He notes that statewide campaigns for governor and U.S. senator in Wisconsin usually cost no more than $6 million and wonders just how saturated the airwaves could be with a message that he says most people already understand.

Assembly Speaker Scott Jensen, R-Waukesha, another potential candidate for governor in 2002, wants to expand Thompson’s s tax cuts and pay for more property tax relief, too. So he’s trying to hold the line behind Thompson’s use of the tobacco money.

Jensen spokesman Steve Baas said the “first priority has to be taxpayer relief.

“We realize this money is going to be coming in for a long time,” he said, suggesting taking care of taxpayers now, long-term health programs later.

The first test of how the debate may come out will be in the Joint Finance Committee, which is in the midst of making changes to Thompson’s budget plan. The two co-chairman of the 16-member panel are at odds.

State Sen. Brian Burke, a Milwaukee Democrat, supports the Robson-Urban bill, and state Rep. John Gard, a Peshtigo Republican, backs Jensen and Thompson.