Supervisors Under Fire on Tobacco Funds

Health, business and labor groups angry with a county plan to spend tobacco-settlement proceeds on bankruptcy debt are circulating a letter calling on the Board of Supervisors to abandon the idea.

The letter, which is to be released next week, calls on the supervisors to place the county’s share of the money into a trust fund and prohibit using any of it to replace funding for existing health programs and services.

Signing the letter are some of the county’s major business and civic leaders, as well as representatives of hospitals, the county medical association and the heart, cancer and lung associations, said several sources working on the project.

County spokeswoman Diane Thomas declined to comment on the letter before seeing it. Previously, several supervisors had made it clear that they would place no restrictions on the money, including using it to retire bankruptcy debt.

The health groups had largely worked behind the scenes for the past several months trying to persuade county officials to dedicate the money to pay for costs of tobacco-related diseases and to fund anti-smoking campaigns.

The money comes from recent settlement by several states, including California, of litigation against the tobacco industry seeking to recover what the states spent in treating smoking-related illnesses.

These groups, however, decided to make their opposition public after the release this week of a county plan to use the roughly $912 million it will receive from the tobacco settlement as security for a bond issue. The bond proceeds would be used to pay off the county’s bankruptcy debt, as well as to build a jail and a juvenile hall and to fund other projects.

The plan received a favorable reception from the supervisors Tuesday after being endorsed by County Executive Officer Jan Mittermeier.

“We are very disappointed to hear that the board is considering this,” said Bruce Vancil, cancer control director of the Orange County region of the American Cancer Society.

“We don’t know what is going on with the board. They forget what the [tobacco settlement] money was raised for.”

Though the tone of the letter is restrained, coalition members are united in saying supervisors and the county government are misappropriating money that should be used for health-care-related endeavors.

Several pointed out that San Diego County supervisors months ago dedicated all of that county’s $945-million tobacco windfall to health costs by agreeing to put the money into a trust account.

Anger in the health-care community has been running so high that Sam Roth of the Orange County Medical Assn. wrote to coalition members cautioning them against intemperate statements.

“Please avoid inflammatory comments on this,” Roth said in a fax sent to members.

Several coalition members ridiculed the plan being floated by the county. They also circulated an analysis of similar plans done by the Standard and Poor’s bond-rating house that raises concerns about the stability of such tobacco-settlement-backed debt.

The battle in Orange County mimics a similar fight in Sacramento, where some Democratic legislators and health-care, business and doctors’ groups are trying to persuade Gov. Gray Davis not to put the state’s $12.5-billion share of the settlement into the state’s general fund.

The letter to the supervisors calls on them to increase by $10 million the amount the county spends on health care. That sum would return the allocation to the pre-bankruptcy level of about $40 million.

Roth said the coalition--which includes advocates for a wide variety of health interests--has “not fallen into the trap of saying money should go to lung diseases or mental health or anything else.”

Instead, he said, the members want a public discussion of which health efforts should be funded by the $30 million to $38 million the county will receive each year for the next 25 years as a result of the tobacco-suit settlement. There will be additional undetermined payments after 2025.