Strickland says funds still available for war on smoking

4/12/2007

COLUMBUS - Facing criticism for leaving the state's anti-smoking efforts out of his plans to spend billions in tobacco settlement dollars, Gov. Ted Strickland has suggested such efforts should return to the idea of exclusively operating off interest earnings.

"We just passed a state law that is, in fact, resulting in fewer people smoking," he told The Blade. "I can't tell them what to do with their $300 million, but I would suggest they may want to consider putting that into an endowment. I don't know how much interest that would give them on an ongoing basis perpetually, maybe $30 million, which is a lot of money to spend."

The governor proposed in his $52.9 billion, two-year budget plan now before lawmakers to sell off the state's payments over the next 40 years from the national settlement with major tobacco companies such as Philip Morris and R.J. Reynolds in exchange for an up-front lump sum of $5 billion from investors.

He has proposed using the money to accelerate the state's ongoing school construction program and to indirectly underwrite a property tax cut for all senior citizens and the disabled, regardless of income.

The Campaign for Tobacco-Free Kids, American Lung Association, American Cancer Society, and American Heart Association yesterday released a poll indicating that voters overwhelmingly believe the state should invest some of that settlement money into smoking prevention and cessation. The poll of 500 Ohioans conducted over two days last week showed 70 percent believe Ohio should dedicate 15 percent of the securitization bond issue to anti-smoking programs, compared to 24 percent who believe the money would be better spent on "school construction, tax cuts, and other state programs."

The poll did not specifically ask voters to choose between anti-smoking programs and the specific property tax cut for seniors Mr. Strickland has proposed, nor did it mention that the Ohio Tobacco Prevention Foundation, which funds programs like the youth-targeting "stand" marketing campaign, has about $300 million in the bank from prior settlement checks in the bank.

The foundation has recommended earmarking 15 percent, or $750 million, from the securitization bond issue, to compensate for the $560 million lawmakers had promised to the foundation but never delivered plus payments expected from future checks that would not be received if securitization occurs.

The foundation has been spending interest earnings but also dipping into its roughly $300 million in principal to fund ongoing programs, a practice that would put it out of business in less than 10 years. When formed seven years ago, the plan was for the foundation to operate only off of investment earnings, but that was when it expected to have an endowment of more than $1 billion at this point.

"The problem is that the tobacco industry spends $750 million a year in marketing in Ohio alone," said Stephen S. Francis, a heart association volunteer and former foundation board member. "We're up against a Goliath and need every resource available to fight it."

Cutting programs back from an annual budget of about $40 million a year now to roughly $30 million to live off investment earnings alone would "significantly cramp our style in terms of being effective and strategic," Mr. Francis said. He noted the state already falls well short of levels recommended by the U.S. Centers for Disease Control and Prevention.

"I don't believe that criticism that what we're doing here is somehow abandoning our commitment to encourage anti-smoking and cessation campaigns," Mr. Strickland said. "I think there's a lot of money there.

"If I was part of the decision-making, I would certainly consider an [endowment] approach like that, especially in light of these other things that have happened," Mr. Strickland said. "I think there are going to be fewer people smoking as a result of this [indoor smoking-ban] law. In fact, we're seeing that in terms of [cigarette] tax revenue already."

Contact Jim Provance at:

jprovance@theblade.com,

or 614-221-0496.