Washington State Legislature Chooses Wall Street Executives Over Taxpayers and Kids
Statement of Matthew L. Myers, President, Campaign for Tobacco-Free Kids
March 13, 2002
Washington, DC — The Washington State Legislature has chosen to reward Wall Street executives at the expense of the state's taxpayers and kids. The proposal to securitize 25 percent of the state's tobacco settlement income is an election year gimmick used to avoid making tough budget decisions.
This proposal will leave Washington with less of its tobacco settlement money. While it is good news that the Legislature adequately funded comprehensive tobacco prevention in this budget, the securitization of future settlement payments will make it difficult for the state to do so once current funds run out. It is a nearsighted approach to the state's budget crunch that breaks the promise of the tobacco settlement – to use the settlement money to help diminish the deadly toll of tobacco.
We have conclusive evidence from states across the country that tobacco prevention programs work to reduce youth smoking and save money for taxpayers by reducing smoking-caused health care costs. Recent studies have found that states are saving about $3 dollars in health costs for every dollar invested in effective tobacco prevention programs. By endangering future funding for tobacco prevention, this securitization proposal also breaks faith with Washington's voters who overwhelming support using tobacco settlement funding for tobacco prevention.
Selling 25 percent of future tobacco settlement income to investors for a much smaller one-time lump-sum payment is not only unfair to future generations but also a bad deal for current taxpayers. Experience in other states, and even the Legislature's own documents, predict a return near 38 cents on the dollar at best. Reports of much greater returns are exaggerated Enron accounting. Like Enron shareholders, Washington taxpayers will get mere change on the dollar. In fact, using this money to fill short term budget gaps will only make the future decisions more difficult as there will be less money available from the settlement to fund needed programs. This proposal's only winners will be Wall Street bond brokers.
The Washington State proposal will end up hurting taxpayers and kids vulnerable to the lure of tobacco addiction. We urge Governor Gary Locke to stand up for Washington's kids and veto this proposal.