Competing Measures Would Spend County Tobacco Money Differently

On Tuesday, county voters will decide between two initiatives that will determine how the county spends its $30-million-a-year share of the national tobacco settlement, a lottery-like windfall that will amount to $750 million over the next quarter century.

The tussle over the tobacco dollars--with Measure G spending it one way and Measure H taking it in a different direction--began when talks broke down between county supervisors and representatives from the health industry.

Faced with a $950-million bankruptcy debt at the time, county supervisors wanted to spend the tobacco spoils on paying down that debt and building jails. The county’s jails are operating under a 21-year-old federal court order that held the county in contempt because of crowding.

Annual allotments of tobacco settlement proceeds after 2025 are yet to be determined. The money is considerable and, while there has been debate on how it should be spent, health care leaders argue that the money was intended to be directed for basic health care and anti-smoking programs.

Health care advocates who want to direct the settlement funds toward health care in the county rather than the lingering bankruptcy debt are backing Measure H, an initiative that would spend 80% of the settlement on health care and the remainder on public safety.

Measure G, drafted by county Treasurer-Tax Collector John M.W. Moorlach, would use 40% of the money to pay down the bankruptcy debt, 42% for health care and 18% for jails and public safety.

The initiative with the highest vote total wins, but if neither gets more than 50%, county supervisors would settle matters and decide how to spend the money.

Moorlach contends that Measure G would pay off some of the bankruptcy debt eight years sooner and help reduce the total debt. The potential savings to the county in interest is $130 million, Moorlach says.

Moorlach’s measure was placed on the ballot by a 3-2 vote of the Board of Supervisors. Measure H, in contrast, was placed on the ballot in a petition drive, with supporters gathering 115,000 signatures, far more than the 71,000 required.

At the time, county supervisors and health care experts were locked in debate on how to spend the tobacco money.

Measure H supporters contend that the county has reneged on a promise made after the county sold its Orange County Medical Center in 1976 for $5.5 million.

At the time, the county said it would pay private hospitals and clinics for treating the poor and other non-insured patients.

But health industry officials say the county never provided 100% of the medical costs. Hospitals and clinics continued providing services without full compensation and absorbed the losses.

As a result, hospitals began closing and the county lost two of its five regional trauma centers.

After the 1994 bankruptcy, county health officials struck an agreement with the health industry to slash medical contracts to allow the county to gain a financial foothold.

Although the county has made gains, the $42 million it now pays for medical contracts is still not at the pre-bankruptcy level of $48 million.

Measure H is backed by a coalition of doctors, hospitals and community groups, community clinics, and a majority of the county’s elected representatives in Sacramento and Washington.

Measure G has been endorsed by the Orange County Taxpayers Assn.