Lt. Gov. Jay Dardenne on Thursday threw a crimp into the Jindal administration’s plan to sell the remaining portion of the tobacco settlement monies by recalling that the state’s voters nine years ago overwhelmingly approved a constitutional amendment that would send a significant portion of the dollars to coastal restoration projects.
The administration hopes to raise about $750 million, which would go toward paying for TOPS, the popular program that pays tuition for some college students, for the next seven years or so.
“Nobody is talking about the state constitution,” Dardenne said.
About 80 percent of the voters in September 2006 approved the constitutional amendment that allots 20 percent of the proceeds of any sale of the tobacco settlement, after concerns were raised that state government might plunder the fund.
“Clearly it’s one-time money that ought not to be used for recurring expenses, if ever we sold the rest of the tobacco settlement,” said Dardenne, who added that he has not studied the proposal in depth and thus has no position other than a stance that a portion of the money goes to coastal restoration as required in the state constitution.
About $150 million will have to come off the top for coastal restoration if the fund is sold for about $750 million by July, as is the plan now.
Commissioner of Administration Kristy Nichols, who is Gov. Bobby Jindal’s budget architect, said the administration supports using 20 percent of tobacco revenue bond proceeds to fund coastal projects. “Generating additional revenue for coastal projects will allow us to leverage federal funds and increase our overall investment. This transaction requires an extensive vetting process to review and evaluate the risk, potential outcomes, and legal obligations,” Nichols said in a prepared statement.
The Tobacco Settlement Financing Corp. voted 12-1 on Monday to begin the process to sell the settlement for cash before the beginning of the next fiscal year, which starts July 1. Tens of millions of dollars come into the state annually from cigarette manufacturers who settled a lawsuit in the late 1990s over health problems caused by smoking. Nichols has said the administration fears that amount might decrease because fewer people are smoking.
All of the talk Monday was about using the money for TOPS.
Nichols did not know on Monday but there appears to be ambiguity in the language, which is why the administration is seeking guidance from the Attorney General’s Office, said Meghan Parrish, spokeswoman for the division.
The AG’s preliminary guidance is that directing 20 percent to coastal restoration projects “appears appropriate.” Parrish said the rest of the money will go to TOPS.
State Treasurer John N. Kennedy, who was the only member of the tobacco settlement board to vote against the sale, said Thursday that the discovery of the constitutional amendment is another reason why the Legislature and the administration should slow down and diligently consider whether the time is right to sell the settlement fund.
He learned of the meeting on Tuesday of last week, then received about an inch and half thick sheaf of documents Thursday. Jindal appointed four new members to the board on Friday, and on Monday they voted to begin the process of selling the fund.
“That money is going to have to come out of the hide of TOPS,” Kennedy said. “That is something that needs to be talked about.”
Kennedy promised that the State Bond Commission, which has to approve the move, will carefully vet the deal before voting. He chairs the Bond Commission.