Virginia Tobacco Farmers To Get Big Chunk of Settlement

RICHMOND — Virginia tobacco farmers can breathe a sigh of relief: national tobacco settlement money that they hoped to share in won’t be diverted to road projects in the north and southeast regions of the state.

During the General Assembly’s 2000 session, lawmakers debated using some of the money for badly needed transportation improvements in the Old Dominion, but decided instead to tap a different fund, reserving a big chunk of the tobacco settlement to help economically stricken tobacco farmers and their communities.

Under a $206 billion settlement of a lawsuit negotiated between 46 states and the major tobacco companies, Virginia expects to receive $4 billion over the next 25 years. The suit sought to recover public health costs of tobacco-related illnesses.

Virginia has initially earmarked 50 percent of the money for tobacco growers — the same amount earmarked by neighboring North Carolina. Ten percent has been allocated to medical research and educational programs aimed at curbing youth smoking. The remaining 40 percent is being distributed at the General Assembly’s discretion.”Tobacco farmers and supporters can rest a little easier now knowing that the money is going to be spent with their best interests in mind,” said state Sen.Phillip P. Puckett, D-Lebanon, who represents a rural tobacco growing region of Virginia.

The legislative push to improve Virginia’s highway, air and rail systems will be funded by issuing more than $1 billion in bonds, backed by the state’s -million-a-year share of federal highway funds. Lawmakers also plan to use taxes paid by fuel dealers as a source of revenue for transportation improvements.

Legislators from traffic-congested Northern Virginia lobbied in vain for more state money for roads.

Virginia tobacco farmers are hurting because tobacco companies have reduced how much tobacco they guarantee they will buy – an amount known as the tobacco quota.

The quota for burley leaf tobacco, grown mostly in Southwest Virginia, has fallen 70 percent over the past three years, Puckett said.

He said his first priority is to compensate tobacco growers for such losses. “I don’t think the general public realizes what that means to a farmer who might have had $10,000 in tobacco income coming in and now he’s looking at ,000,” he said.

Virginia has established a Tobacco Indemnification and Community Revitalization Commission to distribute the transition aid to tobacco farmers. Puckett is a member of the commission. Looking toward the future, he said, the panel anticipates using some of the money set aside for tobacco farmers for community development.

“We do recognize that down the road there will be opportunities to use some of that money for community revitalization as we move from a tobacco economy to whatever new opportunity we have,” he said.

So far, $21.6 million has been distributed to Virginia tobacco farmers from a separate “Phase II” settlement, under which the tobacco companies agreed to set up a $5 billion trust fund for tobacco farmers in all states. Money from the trust fund will be paid out over the next twelve years directly from the companies to the farmers to make up for income lost due to recent cuts in tobacco quotas.