Tobacco Money Triggers Political Row

In what some local political observers call the nastiest fight in decades, a battle over control of tobacco windfall money has consumed one Southern California county.

Arguing that it is the only way to guarantee settlement funds are spent on health care, a private hospital has initiated a ballot measure to divert all payments from public to private control. Ventura County officials say the move is a brazen attempt by a financially unstable private hospital to hijack public funds to shore up its bottom line.

At stake is Ventura County's share of the $206 billion settlement forged between the major tobacco companies and 46 states in 1998. The county is to receive $10 million a year for the next 25 years.

Almost all states are still arguing over how to best use the funds. But many experts say that they know of no other situation in which a private entity is vying for control over public settlement funds.

"While there are some similar ballot measures being floated by health care activists in other states, this is the only case I know of where a private interest is battling an elected government for the money," said Earl H. Pomeran, a professor of health policy at California State University Northridge.

The political fight heated up last week when the Ventura County Board of Supervisors unanimously voted to keep the measure off of the November ballot, even though Community Memorial hospital got more than enough petition signatures. County leaders contend that the ballot measure violates California's constitution by interfering with budgetary powers.

"We have now drawn a line in the sand," board chairwoman Kathy Long said. "It is a line we'll (get) some criticism from, but I'm convinced voters will see through this wrong, wrong, wrong initiative."

Representatives of Community Memorial Hospital promised a lawsuit to get the measure back on the ballot.

"If I cannot trust my county government to protect my right to vote, how can I trust my supervisors to protect my health care? I had respected these people as political adversaries, but also as people who would stay within the bounds of propriety," said Michael Bakst, executive director of Community Memorial.

Bakst also pointed out that county leaders have already spent $3 million of the first settlement installment to pay for federal Medicare fraud fines. He points to that as proof positive that the county will not use all of the funds for health care.

The long history of bad blood between the county and Community Memorial dates to the hospital's campaign against a ballot measure to ensure funding for the county health care agency.

In the current fight, county supervisors helped initiate a United States Postal Service investigation into the hospital's use of non-profit postage rates for pro-initiative campaign mailers.

In response, representatives of Community Memorial threatened a lawsuit claiming county officials are illegally campaigning against the initiative, which by law they cannot do as elected representatives.

"It is just a continuation of the fights these two entities have had several times in the past," said Vince Edelman, a longtime observer of Ventura County politics. "After the tobacco issue is settled, I'm sure they will find another toy to argue over. It almost makes me wish it was decided at the statehouse level."

According to the NCSL, over 400 bills on how to manage and spend the settlement funds have been introduced or carried over into year 2000 legislative sessions.

NCSL analysts break down those bills into basic categories such as health care, tobacco use prevention, long-term care, education, early childhood development and tobacco industry and farmer relief.

And they are quick to point out that the master settlement agreement does not specify how the funds are to be used.Broadly, 44 states are considering (or have already adopted) legislation that would earmark at least a portion of the settlement to smoking cessation programs. Forty-one states are allocating at least a part to health care.

But there are other uses for which the funds are being considered. Eleven states are using the money for education. Louisiana, Michigan and Nevada are establishing scholarships for state residents to attend state colleges.

Kentucky is considering a plan to use a portion of the settlement to establish scholarships for students who will become teachers in state schools.

And some states are using the funds for entirely different purposes. North Dakota has allocated 45 percent of its settlement share to finance a water allocation and flood control project. Nevada is considering using another portion of its settlement to help the state public broadcasting system develop DVD television.

Leaders in Louisiana are still considering selling off their entire settlement for an early, reduced lump-sum payment. That plan has been put on hold because of fears that the tobacco companies are considering bankruptcy to avoid future litigation setbacks.

A coalition of health care groups has introduced a ballot measure requiring that 80 percent of each annual $30 million installment be used on health care, with the remainder going to law enforcement.

And further north, the city of San Jose was considering using its settlement share to become the first city in the nation to guarantee health insurance for every child under 18.But last week, the city council voted down the idea, saying that the money would better be spent on education, anti-smoking measures and seniors programs.