Tobacco Money’s Place
A common daydream is what to do when you hit it big. You win the lottery, come into an inheritance, sign on early to an Internet company that goes public. The bucks come rolling in.
A Rolls-Royce would look nice in the driveway. Maybe a vacation. How about paying off the mortgage?
Orange County is likely to get that kind of windfall, perhaps $30 million or more annually for the next 25 years, as a result of tobacco companies settling lawsuits filed against them by dozens of states.
The view from the top levels of county government on how to spend the money is anything but frivolous. Chief Executive Officer Jan Mittermeier and Chief Financial Officer Gary Burton want to use the revenue to pay off debt incurred as the county wriggled out of the December 1994 bankruptcy.
They also argue that the money can be the basis for a bond issue that would provide funds to build a jail and perhaps other facilities.
The Mittermeier-Burton vision is tempting and has received an initially warm reception from county supervisors. But the plan is flawed.
The first priority of the tobacco settlement funds should be health care. Orange County is wealthy and its better-off inhabitants take it for granted that when they fall ill, doctors and hospitals await. Managed care has complicated everyone’s life, more so in recent years as medical providers go out of business or delete some coverages. Still, most residents have insurance through their employers or on their own and have enough money for deductibles and co-payments.
The situation is different farther down the economic ladder.
Orange County’s United Way reported last month that according to the most recent statistics available--those from 1996--about 150,000 children under 18 in the county live in poverty.
Many of those children, and their parents, do not have health insurance. If they are so poor as to qualify for the county’s version of Medicaid, known as CalOPTIMA, the county has to be sure they know about the program. If they are from families of the working poor, with too much money for Medicaid but not enough for medical insurance after paying for food, rent, transportation, clothing and other necessities that eat up money so quickly, they county needs to find out how to protect them.
Too many of the uninsured working poor ignore health problems until they become so acute the hospital emergency room is the only answer. That’s expensive for the individual but also can shortchange the hospital if the bill does not get paid. Others without insurance turn to unlicensed medical clinics, sometimes with disastrous results.
Orange County gave up its county hospital decades ago. In return, it promised the doctors and private hospitals who inherited responsibility for treating the poor that it would help with the bills. It’s a promise that never has been fulfilled completely.
The county Health Care Agency was among the departments that suffered after the bankruptcy, when the county lost $1.64 billion. Hundreds of millions of dollars were recovered, but the county was forced to sell bonds to emerge from bankruptcy; that added debt requires a good amount of county money each year to pay the interest.
But the burden on the Health Care Agency can be seen by comparing its share of the general fund outlays before the bankruptcy ($39 million, or 17%) to its share afterward ($30 million last year, or 10%).
The county does need more jail beds, whether by expanding existing facilities or building new ones. Its detention center for juveniles needs expansion, as does the shelter for abused and abandoned children.
But the states, including California, sued the tobacco companies to get recompense for the costs incurred treating those with smoking-caused illnesses. While it is true that the settlement imposes no strings on how the money is spent, fairness dictates that health issues be at the top of the list.
If the county can determine some way to leverage the proposed revenue into collateral for bonds that provide enough money to spend $30 million a year on health care and still have funds for other purposes, fine.
The county also made a clear decision about how it was going to recover from bankruptcy. It should soldier on along the path of reducing services and spending until it puts its financial debacle behind it.
