Friday, June 20, 2008

Use tobacco money to balance budget

Lt. Gov. Brian Krolicki says he hopes legislators consider approving his plan that could raise $600 million to $775 million in revenue without increasing taxes to address the budget shortfall.

"These are extraordinary times, and Nevada needs to take extraordinary measures," Krolicki said Thursday by phone from Beijing, where he is heading a state trade mission.

Under his plan, the state would sell bonds and use the revenue to cover current debts. The bonds would be repaid from the annual payments the state receives from tobacco companies.

Nevada receives about $50 million a year from the tobacco industry to compensate for the medical costs to the state of tobacco-related illnesses.

"The situation is so dire now it makes sense to use tobacco securitization to balance the state budget," Krolicki said. "You can't nickel and dime your way out of a $1 billion budget shortfall."

Legislators next week are scheduled to go into a special session to cut $100 million to $200 million more in state spending because of falling tax revenues. Lawmakers and Gov. Jim Gibbons already have approved $914 million in cuts to the two-year budget that ends June 30, 2009.

Krolicki's plan isn't without its critics.

In a letter Wednesday to Gibbons, state Treasurer Kate Marshall said her office has been unable to secure the "working papers" on the assumptions Krolicki used to arrive at the estimated proceeds from his plan. If the Legislature considers the proposal, Marshall said, she wants to work with the attorney general "to determine the extent to which such action would put the state at risk of engaging in fiduciary failure."

Marshall also pointed out that Krolicki in 2003 told the Senate Committee on Government Affairs that a tobacco securitization plan would be a "tremendous fiduciary failure" and should not be used to "balance today's budget."

At the time, Krolicki was state treasurer.

Krolicki said that in earlier sessions he advocated legislators issue bonds against the tobacco money. But at the 2003 session, he said, he opposed the plan because "it is too expensive and the market is not right."

The situation has changed dramatically since 2003, Krolicki said, and the plan is needed because there is no guarantee Nevada will continue to receive money from the tobacco industry at current levels.

The tobacco money now is used to cover some of the expenses of the Millennium Scholarship and SeniorRx programs.

"It is one of the few options that can raise a considerable amount of money without raising taxes or substantially harming a considerable amount of people," Krolicki said.

Legislators and the governor are looking at ways to cut spending without laying off workers.

Krolicki said his plan is available on his Web site and in handouts he has distributed to the media. He said he proposed creation of a working group, which would include the treasurer, to review the plan before any bonds were sold.

"I would be pleased to work with her (Marshall) and show how the model works," he said. "She is making noise now in a nonconstructive way."

Since Marshall assumed his job in January 2007, the two have been at loggerheads.

Krolicki has been investigated by the Nevada Division of Investigation because of concerns Marshall raised over his handling of a college tuition program and office e-mail messages. No charges have been filed against him.

Uganda: Tobacco Firms Should Be Socially Responsible

I wish to draw attention to the damage tobacco growing has caused to the environment in West Nile, the North, Bunyoro and south-western Uganda.
Several acres of woodland have been felled for flue-cured tobacco production in Maracha, Arua, Koboko, Yumbe, Hoima, and Masindi districts. Forests that would otherwise have filtered carbon emissions and protected arable land from erosion are removed, and temperatures in the tobacco-growing districts are rising.
Firms like British American Tobacco, Leaf Tobacco and Commodity, as well as Continental, in their fallacy, give eucalyptus seedlings to farmers supposedly to replace chopped forests without considering the long maturity period and its impact on the water table.
The tobacco firms do not plough back their high profits yet they hype their cosmetic social responsibility programmes. South African Breweries' "Drive Arrive Campaign" resulted into 10% decline in road accident-related deaths in 1998. What have the tobacco companies done?
Apart from the trivial contribution through the mandatory 2000 Crop Ordinance that Arua enacted, tobacco companies have not done much for the community. Since tobacco growing is laborious and an all-year round activity, many food crops are foregone by tobacco farmers, which has caused food insecurity.
Besides, during peak seasons, students stay home harvesting tobacco, leading to poor academic performance and child labour. Tobacco companies have not trained farmers to invest their little earnings and this leaves them in a cyclical poverty trap.
The negative impact of tobacco growing includes the accumulation of chemical compounds in soils and declining fertility. Tobacco production negatively affects people's health. The effects include nicotine poisoning, pesticide exposure, respiratory effects, musculoskeletal and other injuries.
The Government should assist tobacco growers in West Nile to produce alternative crops that thrive well there without fertilisers or pesticides. The sh48b the Government gets in tax revenues from tobacco exports and products should not shroud the negative effects on tobacco on the population.