County eyes tobacco cash possibilities

April 22, 2002 12:00 am

By Jennifer Grimes

Triplicate staff writer

As tobacco companies begin paying the states that won lawsuits against them, Del Norte County is forced to decide how to spend its share.

So far, state legislators say counties can spend the money however they want to. But some Del Norte County officials fear lawmakers may change their mind.

"My concern is that legislators will act to make us spend the funds on specific uses, instead of delegating them as discretionary funds," said Del Norte County Supervisor Clyde Eller.

Because the settlement is to repay counties for their healthcare costs related to smoking, Eller said perhaps Del Norte should spend the money on health-related expenses.

At this point, Del Norte is expected to receive about $300,000 a year for as long as cigarettes and other tobacco products are made. No figures have been firmed up, however, because the state doesn't have all of the settlement payments yet.

Also, the yearly payment depends on how many cigarettes are sold.

"It's a ‘Catch-22,' because you would like people to stop smoking, but we only get the money if people continue to smoke," Galatioto said.

So far California has received $278 million this year from companies forced to pay for damages caused by cigarette smoking to help states recoup the costs associated with those damages. According to the state attorney general's office, California is expected to get $20 billion by the year 2025.

On Tuesday, the Board of Supervisors will consider a spending recommendation by Galatioto.

"We're paying half-a-million dollars in health-care costs, so we could use the money that way," she said.

"In recent years, it has become more difficult for the county to maintain funding levels to provide for the rising cost and demand for health care."

Galatioto and county auditor Christie Babich were once considering selling Del Norte's future stake of tobacco settlement funds to get a guaranteed yearly sum for about 30 years, a trade termed "securitization."

The two tossed the idea recently after realizing the yearly amount would be decreased considerably if they went the securitization route.

"We wouldn't receive annual payments until 2004 and it would severely reduce the payment to $149,000," Galatioto said.

"The only benefit is that it would reduce the risk," of payments stopping and or decreasing in the future, she added.

The board will make final decisions on Tuesday in its regular meeting.