Supervisors Review Spending Plan for Tobacco Settlement

After months of haggling over how to spend about $900 million in national tobacco settlement funds, the Orange County Board of Supervisors on Tuesday considered a new proposal that would give the lion’s share, 60%, to health care and anti-smoking programs.

Supervisors delayed for a week deciding whether to accept the 40% deal proposed by a coalition of health care advocates or face a possible November ballot measure that would give the county only 20% of an estimated $30 million to $38 million a year in tobacco money over the next 2 1/2 decades.

Supervisors previously had offered to spend 20% to 25% a year on health care and anti-smoking efforts over the next five or six years, reserving the bulk of funds for jail construction and debt reduction, and making no firm commitment on dividing the funds beyond mid-decade. On Tuesday, they asked the county auditor-controller to analyze the latest plan’s economic impact.

Michele Revelle, spokeswoman for Citizens Health Alliance to Reinvest the Tobacco Settlement, said her group is facing a May 17 deadline to agree to the terms and its language. Once both sides agree, the plan is to have the county sponsor the latest agreement and have it placed on the November ballot for voters to approve as an initiative.

“We feel that we made a sincere effort to reach a compromise, and we certainly hope that they do,” Revelle said.

The health care lobby already has gathered enough signatures on a proposed November ballot initiative calling for 80% of the funds to be spent on health care. County officials have said they would consider challenging the initiative’s constitutionality.

The latest proposal came as Jeffrey Wigand, the tobacco whistle-blower whose story was portrayed in the film “The Insider,” was in Orange County to lobby for health care as a priority.

Wigand, who spoke at a news conference outside the county Hall of Administration before supervisors met Tuesday morning, said he believes it is “a crime” for local governments to use tobacco settlement funds on anything but health care.

Under terms of the latest proposal, health care advocates want supervisors to continue to spend $40.3 million in county funds on health care, with a provision for annual cost-of-living increases. Tobacco dollars, which would be deposited in an account called the Orange County Tobacco Settlement Fund, would come in addition to county health care spending.

The tobacco funds for health care would be split among a variety of services, with 19% for the care of seniors and those with disabilities; 23% to cover emergency medical services for nonpaying patients; 20% for nonprofit community medical clinics; 20% for inpatient and outpatient health services; 6% for hospitals to help pay for charity care; and 12% for tobacco prevention and control.

The health coalition also wants a guarantee of 60% funding for the 25-year life span of the tobacco settlement.

But county Chief Financial Officer Gary Burton, who is part of the county’s negotiating team, said in a telephone interview that he has taken exception to the guaranteed funding levels, saying that arrangement would tie the hands of future supervisors.

“The issue is the board needs to maintain some room for flexibility,” Burton said. “The county needs to maintain that to administer the county in economic good and bad times.”

Supervisors also have authorized Burton to “securitize”--or leverage--part of the tobacco settlement through a nonprofit agency. The agency would sell bonds tied to the tobacco settlement and use the proceeds to help pay for jail expansion and reduce the county’s debt.

Under the new plan, if the county chooses to sell the bonds from any of the settlement funds, the health care group objects to its portion being used as collateral for the county’s plan. Revelle called that idea “unacceptable.”

But Supervisor Jim Silva and Chairman Chuck Smith repeated Tuesday that most of the money should go to what they have long considered their two biggest priorities: cutting debt incurred during the 1994 financial collapse and reducing jail overcrowding.