Wednesday, Jun 20, 2018
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Siren song of tobacco cash

OVER the past six years, Republicans who control the Michigan legislature have studiously avoided spending even one thin dime of the state's share of the national tobacco settlement for anything related to the health damage smoking has done to Michiganders.

Now they're roaming even further afield with an unwise scheme to sell what's left of the tobacco money for a lump sum of quick cash so they can cut business taxes, reinstate a college scholarship program, and bolster the state's Medicaid trust fund.

Gov. Jennifer Granholm ought to keep a level head and not get sucked into going along with this plan, which could hurt the state's long-run fiscal and health-care prospects in exchange for questionable short-term gains.

Under the national settlement reached in 1998, five major tobacco companies agreed to pay $206 billion over 25 years to compensate 46 states for the cost of treating illnesses related to smoking. But Congress decided later that the windfalls could be spent in any way the states chose.

Michigan's share was about $8 billion. GOP lawmakers believe they can sell the right to what remains for $3 billion. About $1 billion would be used to reduce business taxes and provide tax credits in an attempt to "jump start" the state's moribund economy. The other $2 billion would go to resume the Merit Award scholarship program and shore up Medicaid spending.

Michigan's unemployment rate recently topped 7 percent, so it is not surprising that lawmakers and Governor Granholm are under pressure to do something to create jobs. But, no matter how earnestly Republicans preach, cutting business taxes doesn't necessarily produce new jobs. Sometimes, as recent federal tax data suggests, the result is simply higher corporate profits.

Moreover, spending $2 billion of the quick cash for ongoing programs such as scholarships and Medicaid is one more example of feeding a need now at the expense of hunger later. It is, in effect, borrowing to meet current operating expenses, always bad public policy and more so for states, which cannot run budget deficits.

In any event, this newspaper has consistently supported use of tobacco money for health-related services. Michigan has failed to earmark any of its windfall for such purposes, and ranks last among the 50 states in spending on tobacco prevention and cessation. (Ohio, meanwhile, ranks fifth, although Buckeye State lawmakers also continue to divert tobacco money, including $230 million to balance the latest budget.)

In Michigan, some 14,500 adults die every year from smoking, and health-care costs directly caused by smoking total more than $3 billion. At the same time, the state has raised its cigarette tax to $2 a pack, among the highest in the nation, but none of that revenue goes for anti-smoking programs.

Cutting taxes and handing out college scholarships may be politically popular in the short-run but they won't solve the state's looming health problems. The legislature and the governor should reconsider.

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