Blanco aide: La. tobacco settlement sale could happen in June

THE ASSOCIATED PRESS

The sale of the remainder of Louisiana’s tobacco settlement money could come in June at the earliest, if the idea gets the needed approval from the Legislature and the state Bond Commission, Gov. Kathleen Blanco’s fiscal adviser said last Wednesday

Jerry Luke LeBlanc spoke at a meeting of the state Tobacco Settlement Financing Corporation Board, which held a procedural vote to approve the idea of selling the money. The board voted 8-1 in favor, with Treasurer John Kennedy the only vote in opposition.

The idea still requires approval from the Bond Commission, the Legislature’s joint budget committee and the full Legislature.

Louisiana is one of 46 states that settled lawsuits with tobacco companies in 1998 in return for installment payments for health care costs related to tobacco use. The state sold 60 percent of its share in 2001 for nearly $1.1 billion in a lump sum.

Selling the remaining 40 percent of the settlement would give the state upfront money but could mean Louisiana receives less cash than it would get through the current annual payment plan. However, a sale to private investors would relieve the state of the risk that tobacco companies in the future might be financially unable to pay the bills.

Kennedy has opposed moving ahead quickly with a sale, saying the state needs to collect more information on the matter because so many variables could affect the settlement’s price: market saturation, cigarette companies’ financial health and other factors.

“I think the timing’s bad,” he said. “It’s a mistake.”

Kennedy said he believes there’s a glut in the market of these types of bonds that will force prices lower and bring Louisiana a poor return on the sale.

A sale would involve selling bonds to investors, creating long-term bond debt for the state.

The lump sum cash could go toward coastal protection, education and health care.