Who gets the money?

Trying to clear the smoke that surrounds Measure G

It’s a strange and rare phenomenon when county officials and the leaders of many of its most important health care organizations are at each other’s throats, but that’s what’s happening this year because of Measure G.

In an unusual show of solidarity, all five county supervisors are adamantly opposed to the Nov. 5 ballot initiative that would filter big-tobacco lawsuit money out of the county’s general fund to pay expenses incurred by clinics, hospitals and such health education groups as Enloe Medical Center, the American Cancer Society, the American Lung Association and the Butte-Glenn Medical Society.

At stake is $2.5 million annually, money that could go a long way toward relieving the financial burdens of nonprofit health care organizations but would also take a big chunk out of the strapped county’s pocket, so it’s no surprise that a public catfight has broken out among people who usually are friendly with each other.

It’s no wonder supervisors are unanimously opposed to Measure G; they have controlled the money since California’s Bill Lockyer and 45 other state attorneys general settled a 1997 Medicare compensation lawsuit against tobacco companies Brown & Williamson, Lorillard, Philip Morris and RJ Reynolds.

California’s share of the settlement is $25 billion over the next 22 years. Measure G supporters say local health care desperately needs Butte County’s share of the settlement money, and spending big, bad tobacco dollars on health care is not only sweet justice, but also the original intention of the lawsuit.

In response, Third District Supervisor Mary Anne Houx says bluntly that Measure G is a blatant money grab that will deal a severe blow to Butte County public safety. “This will be disastrous for Butte County,” Houx said. “If you take $2.5 million from me, how am I going to replace it?”

Houx, who is a smoker and claims to have donated to nonprofit health providers on the other side of the issue, said she won’t hand out another penny if Measure G passes. “I will figure they have stolen the public’s money,” she said.

Moreover, she guarantees that, if health care programs receive the settlement money, the Sheriff’s Department will cut 11 positions, including six deputies; the Probation Department will lose seven positions, including five probation officers; the District Attorney’s Office will lose seven positions, including three deputy district attorneys; one fire station will close; and the entire new book budget for Butte County libraries will vanish.

“These are not scare tactics,” Houx said. “It’s the truth.”

In the war of words that has characterized debate over Measure G, local health care providers insist that county officials need to learn how to get along without the money.

“The county has had problems with mismanagement for a very long time,” said Phyllis Bond, community services director for the American Cancer Society and leader of the Yes on Measure G campaign. “Why should [health care providers] be held accountable?”

Before supervisors had access to their precious settlement money in 1998, a utility users’ tax on residents of unincorporated areas of Butte County kept the county’s head above water.

That tax, having “sunsetted,” is no longer available, and only a countywide vote can bring it back. Now, Houx said, the only other way to avoid financial ruin is to “go into the basement of the administration building and print the money.”

In response, Bond said that, while she understands that Butte County is always in need of more funds, county officials are using the settlement money unethically.

“How can the county balance its budget on the deaths of people?” Bond said. “If you do not spend this money on tobacco education and health care, you’re doing exactly what the tobacco companies want us to do.”

Measure G proposes that 10 percent of the annual settlement money go to the Butte County Department of Public Health’s tobacco prevention and control services, 20 percent for programs meant to reduce tobacco consumption, another 20 percent to help provide emergency medical services for nonpaying patients, and 10 percent for health clinic services to low-income adults and children not covered by insurance.

The initiative designates another 5-percent chunk of the money for health care for senior and disabled citizens, 10 percent for hospital charity care and recovery from bad debt, another 20 percent for public safety, including fire and police protection, and a final 5 percent for county administration.

Fred Davis, a former Chico city manager and leader of the No on Measure G campaign, says that the proponents’ intentions of giving 30 percent of the settlement money to smoking cessation and education is not enough to convince him that smoking cessation is their main objective.

“If the people for Measure G are going to use tobacco cessation as their pitch for the money,” Davis said, “they should put all of the money into it. Instead they want to pay physicians and hospitals for bad debt. Why should they take taxpayer money to do it?”

He says all accountability is lost when nonprofits get hold of the money.

“Whether the government likes it or not, it is required to do an annual audit, and all records are to be made available to the public,” Davis said. “It’s just not true with private organizations. The system is such that it doesn’t allow for real accountability.”

For health care providers, however, the money is the answer to perennial financial problems resulting, in large part, from government actions.

“Much of the care we give is under-compensated,” said Donald Mansell, president of the Butte-Glenn Medical Society, in a letter asking for donations for the Yes on Measure G campaign. “As the result of unfunded federal and state mandates, emergency care must be provided, regardless of ability to pay. While [health care providers] maintain our legal and ethical obligations to our patients, we suffer financially.”

Bond said the 1998 tobacco settlement negotiations originally required a large portion of the settlement to be spent on tobacco prevention, smoking cessation and health, but tobacco company lawyers ultimately dodged the mandate in the last leg of negotiations.

As a result, the final “master settlement agreement” left spending to the discretion of local governments, a fact opponents of Measure G are underscoring.

“There are no requirements in the master settlement agreement to spend the money,” Davis said. “The law is clear.”

The state Attorney General’s Office echoes Davis’s claim. “There is no restriction whatsoever in the terms of the Master Settlement Agreement itself, or the Memorandum of Understanding between the state and the counties and designated cities, as to the purpose for which the tobacco funds may be used by any jurisdiction entitled to receive them,” Deputy Attorney General Corinne Murphy wrote to Butte County Administrative Officer Paul McIntosh on June 7.

Regardless of the county’s position, Bond said, California is suffering from a health care crisis, with $7.1 billion in annual health care costs directly caused by smoking. Of that amount, $2.3 billion is paid by Medi-Cal. Using figures from the Centers for Disease Control and Prevention, Bond estimates that the total annual cost of health care cost from smoking in Butte County adds up to $89 million, including direct medical costs and indirect medical costs, such as lost productivity.

“This is really nasty stuff,” Bond said, “and we’re not doing enough about it.”

The Centers for Disease Control recommends a minimum of $5 per capita for an effective state tobacco control program; California’s Tobacco Control Program for 2002-03 spends less than half of the recommended amount.

Bond added Propositions 99 and 10 are further examples of health care getting shortchanged by the government.

California voters passed the propositions in 1988 and 1998, respectively, imposing a 25-cent tax, then an additional 50-cent tax, on all tobacco products. Revenue from the 25-cent Prop. 99 tax was intended specifically for education, tobacco-related research, fire control and hospitals and doctors who provide uncompensated care.

But even though the courts have repeatedly upheld that the tax money is meant only for the voter-approved programs, state government gave Proposition 99 money to other programs not intended to benefit from the tax.

Prop. 10 was designed to fund programs that improve child development, and Butte County’s share of the revenue comes to about $2 million per year. Out of the over $8 million in Proposition 10 funds received by the county, $72,000, or less than 1 percent, has been spent on smoking cessation programs.

But Houx insists that health care is not suffering at the government’s hands. She said the county spent $6.7 million on indigent health care last year, and all health care services get an annual $7.9 million.

Of the $2.5 million in settlement funds the county has received this year, $150,000 has gone toward smoking cessation.

“Now over and above that [health care providers] want the $2.5 million,” Houx said. “It’s staggering—and clearly a ploy to raid the public treasury.”

Bond, however, insists that health care is more worthy than bureaucracy.

“If Measure G passes,” Bond said, “The money would be spent where it should. We are doing this for the health of our county.”

Other related stories in the CN&R this week:

Six questions for six candidates

School board shakeup

Daunting Propositions?

Endorsements: who, what and why