About that tobacco money
At settlement, all agreed that justice prevailed. We’d prevented kids from taking up smoking, and everyone held hands and sang “Kumbaya.” Politicians claimed victory. Government could cover the cost of treating sick smokers. Big Tobacco was contrite. Millions of jobs were saved, and the widows’ and orphans’ dividends would continue.
When the cash came in, however, slobbering legislators went insane. They rolled out the pork barrel for all manner of projects.
Self-righteous public-health organizations that conceived this atrocity to fund their own coffers have cried foul, claiming that children are being overlooked in the legislative frenzy to spend the money. Not surprisingly, the General Accounting Office discovered only 24 percent of this treasure trove has been spent on health-related initiatives.
Ironically, these same groups are learning identical lessons as taxpayers, to wit: You can rarely trust self-serving politicians with someone else’s money.
Enter Nevada State Treasurer Brian Krolicki. In 2000, the tobacco payments Nevada received were cut because of a 14 percent drop in cigarette sales. Krolicki, a Republican, was paying attention. He recognized that Nevada could find itself in a precarious position if the ability of the tobacco companies to continue paying was compromised.
In 2001, he presented a plan to the Legislature to secure Nevada’s share of the tobacco settlement. This plan would have allowed Nevada to sell off its share of the settlement payments in exchange for a lump sum. The state could then have invested the lump sum received, thus protecting the settlement principle and generating additional investment income for Nevada’s coffers. That translates into about $600 million in income without ever touching the principal, at a relatively conservative and attainable 6 percent average annual rate of return (or about $1 billion total).
Absolute genius. Predictably, the legislation was defeated by Democrats who couldn’t work a calculator—then and again in 2003.
Speaking to the Board of Regents in a recent report on the financial status of the Millennium Scholarship program, which is funded by the tobacco settlement, Krolicki said the scholarship program would have to be scaled back or funded with other money. Nevada is receiving less settlement money than originally projected because of declines in smoking and the Legislature’s failure to act on his prior securitization legislation.
Democrats on the Interim Finance Committee piously denounced the criticism. Ways and Means Chairman Morse Arberry, D-Las Vegas, said that Krolicki “needs to come here and explain the statements he made.”
“We were accused, the Assembly, of some mistakes along the way with this Millennium Scholarship,” Arberry said. “We don’t appreciate what he did to us with the Board of Regents.”
I’ll bet. No one likes to be reminded he’s a moron.
“In terms of accusing Assembly Democrats of not supporting securitization of the tobacco settlement and leaving on the table $200 million—that’s not an accusation, that’s a fact,” was Krolicki’s quoted response in the Nevada Appeal.
I’d say that Arberry and his ilk are the ones who need to do some explaining.