Tobacco Deal Gets Differing Reactions

SACRAMENTO — California’s cash-hungry cities and counties all but embraced Monday’s tentative settlement of lawsuits against the tobacco industry and the riches it promises, including $838 million for Orange County.

Though officials aren’t counting the money yet, they said the proposed tobacco settlement would bring in enough to wipe out all debts from the county’s historic bankruptcy four years ago.

“It’s great news,” said Jim Silva, chairman of the County Board of Supervisors.

He would like to earmark most of the money to pay off the $750 million in bankruptcy-related debts, but the board also needs money for a series of projects it has listed as priorities, such as expansion plans for a branch jail and a children’s home.

State lawmakers, meanwhile, took a more cautious approach to the landmark agreement.

Atty. Gen. Dan Lungren, whose deputies helped negotiate the deal, hailed the $206-billion nationwide agreement as a “monumental feat,” calling it “the best possible settlement for the state of California.”

Under the agreement, California would receive $25 billion over 25 years, with half that sum going directly to counties and the state’s four largest cities--Los Angeles, San Diego, San Jose and San Francisco. The other half would go to the state.

Lungren, who announced the deal in Sacramento, said he hopes that the money will be spent on “health programs to benefit young people.” But while most state and local officials agreed with Lungren’s idea, the 131-page settlement imposes no strings on how the money must be spent.

Such decisions will be left to the boards of supervisors in 58 counties, the city councils of the four largest cities, state lawmakers and Gov.-elect Gray Davis.

Davis, who joined a separate lawsuit against the tobacco industry whose fate was uncertain as of Monday, did not comment, choosing to wait for a briefing from the lawyer representing him. But Sean Walsh, the spokesman for outgoing Gov. Pete Wilson, said: “On balance, it is a good agreement for the state.”

For the state itself, the settlement would translate to about $500 million a year, with the money going to the general fund, which totals $53.3 billion this fiscal year.

The deal requires that states sign the agreement by Friday, a provision that critics condemned.

For Orange County, the money likely would be spent on a half-dozen projects.

At the top of the list are the $33.5-million design and construction of the Theo Lacy Branch Jail expansion, the $55.4-million expansion of Juvenile Hall and construction of another facility for orphaned and abused children.

Supervisors also have acknowledged that the county needs about $71 million worth of maintenance on buildings, repairs that the board had to defer.

The supervisors are expected to review long-range spending priorities in January. If the tobacco deal is cemented by then, the additional funds will be thrown into the mix, said Gary Burton, the county’s chief financial officer. “We’ll have to see which ones we can tackle,” he said.

Other funding needs identified by supervisors include two final design and construction phases for future expansions of Theo Lacy at a total cost of $45.8 million.

All of the revenue priorities, including the bankruptcy debt, add up to about $1 billion.

Health officials said they hope supervisors would set aside money for programs to keep children from becoming addicted to cigarettes.

“This money is coming based on [the costs of] decades of abuse, but what about from tomorrow on?” asked Herm Perlmutter, supervisor of the tobacco use prevention program within the county Health Care Agency.

He said public and private spending on tobacco-related illnesses and deaths is estimated at $500 million a year in Orange County, including medical treatment, lost hours, insurance shortfalls and funeral expenses. That translates to $1,541 for each smoker.

About 15% of Orange County residents are smokers, compared with 18% in California and 25% nationally, Perlmutter said.

Lungren said Monday that he intends to sign on by the Friday deadline, but his successor, Atty. Gen.-elect Bill Lockyer, called the requirement “absurd” and said the apparent rush to win approval “could easily undermine public support.”

Lockyer urged that the industry and states delay the final agreement for at least three weeks to give the public time to review the massive settlement document.

State Senate Judiciary Committee Chairman Adam Schiff (D-Burbank) scheduled a hearing on the settlement in Pasadena for Wednesday, and invited Lungren to attend. The outgoing attorney general was noncommittal.

Under the law, Lungren said, he can settle the state’s claim on his own. For the tobacco industry to agree to it, however, a “critical mass” of other states must agree to its terms. Cities and counties that have filed separate lawsuits--such as Los Angeles and San Francisco--could reject the settlement and pursue their legal cases.

Schiff called the Friday deadline a “suspiciously short timetable.” He noted that while the $25-billion payment may seem huge, California should receive twice that sum, based on its population, when the deal is compared to multibillion-dollar settlements already struck by Minnesota, Texas, Florida and Mississippi.

While some Democrats in Sacramento were skeptical about the deal, chances that it would be scuttled by local officials in California seemed slim. Lungren’s office declined to release a breakdown of the payments to local governments, but the San Francisco city attorney’s office provided some estimates.

Many local officials already have ideas about how to spend the money, proposals that include funding programs aimed at fighting teenage smoking, enforcing the ban on smoking in bars, restaurants and other workplaces, refurbishing hospitals and helping fund health care for children.

“It should not get lost in the bureaucracy,” said Los Angeles County Supervisor Zev Yaroslavsky. “It should not go to paving streets and trimming trees. . . . If we were smart about how we spent it, we could make a difference in health care.”

Yaroslavsky said he hopes that the board would spend the bulk of the approximately $3.15 billion the county will receive over the next 25 years on providing health care to children.

“It’s hard to walk away from that [money] if you’re Los Angeles County, and you remember what it was like in 1995, when we weren’t sure we could keep our health clinics open,” Yaroslavsky said.

Times staff writers Tony Perry, Tom Gorman, Pamela J. Johnson and Nicholas Riccardi contributed to this report.