Oct. 30 2003
Washington, DC — While Governor Bill Owens claims kids are a high priority, the budget proposal he made today actually lets down Colorado kids by making it virtually impossible for the state to use its tobacco settlement money to protect them from tobacco. His proposal, known as securitization, would cash in all of Colorado’s future tobacco settlement payments for just pennies on the dollar. Colorado is already moving backwards in protecting kids from tobacco by cutting funding for its tobacco prevention program by 75 percent in the past year, from $15 million in annual funding to $3.8 million. This proposal will leave no tobacco settlement money to restore or increase tobacco prevention funding. Securitization is a nearsighted approach to the state’s budget crunch that will leave the state with less settlement money and higher tobacco-caused health care costs in the future. It is a bad deal for Colorado’s kids and taxpayers.
Selling future tobacco settlement income to investors for a much smaller one-time lump-sum payment is not only unfair to future generations, but a bad deal for current taxpayers. This nearsighted budget gimmick will leave the state with far less tobacco settlement money for tobacco prevention and other purposes in the future and could cost Colorado taxpayers even more by harming the state’s credit rating. Some other states that have securitized have seen a drop in their credit rating, which has cost taxpayers millions because a lower credit rating means higher interest payments when a state borrows money.
Securitization makes it far less likely that the tobacco settlement money will be used as intended – to fund tobacco prevention programs that reduce youth smoking and save money for taxpayers by reducing smoking-caused health care costs. The best state tobacco prevention programs are proven to save money by reducing health care costs by as much as $3 for every dollar spent on them. These programs have cut youth smoking rates by as much as 50 percent in just a few short years. But Colorado will not realize these benefits unless it acts quickly to restore funding for tobacco prevention.
Tobacco’s toll is devastating in Colorado – 25.3 percent of high school students currently smoke, and 10,800 more kids become regular, daily smokers every year, one-third of whom will die prematurely. Every year, tobacco use kills 4,200 Colorado residents and costs the state $1 billion a year in health care bills. Colorado will receive about $150 million in tobacco settlement and cigarette tax revenue in 2004. With just 16 percent of this tobacco money Colorado can fund a tobacco prevention program at levels recommended by the U.S. Centers for Disease Control and Prevention. Unless Colorado reverses course, it will miss a once-in-a-lifetime opportunity to reduce smoking, save lives, and reduce tobacco-related health costs.