Home > Another Problem for Strickland’s Budget: Tobacco Money

Another Problem for Strickland’s Budget: Tobacco Money

July 16, 2009 at 11:00 am Matt

From The Plain Dealer:

COLUMBUS — The new state budget relies in part on $258 million to pay for human-services programs, but the money is frozen because of a Franklin County court case.
The money is tied up in a lawsuit brought by anti-smoking advocates trying to stop Gov. Ted Strickland’s plan to drain $230 million from the Tobacco Use Prevention and Control Foundation, and the legal maneuver has health and human services advocates worried.

The $51 billion two-year state budget passed by Ohio lawmakers on Monday snatches up the $258 million (the $230 million plus interest) and divides it up to cover an array of human services. The plan is to spend $80 million of the money the first year and $178 million in 2011.
The biggest chunk — $129 million — is spent to cover optional Medicaid services such as vision, podiatry, dental and hospice care, while $92 million would be spent on adult and child protective services.[...]

The frozen funding is one of several question marks hanging over the budget, expected to be signed soon by Strickland. Some lawmakers have questioned the administration’s estimate that a plan for slot machines at racetracks will generate $933 million, given the likely court challenges. Others have questioned whether the state’s revenue estimates — which have missed the mark repeatedly in recent months — will be any more accurate over the next two years.

The $258 million is on ice while Franklin County Common Pleas Judge David Fais decides whether the state can use the money, which the foundation received from the national settlement of lawsuits against the major tobacco companies, toward a $1.57 billion economic stimulus package. The state has repeatedly used tobacco settlement money over the years to balance its budget.

First of all, the tobacco settlement, which dates back to when Betty Montgomery served as Attorney General, was unconstitutional. It violated Article 1 Section 10 of the US Constitution, as states formed a compact to file the lawsuit without the approval of Congress and through their actions enacted a national sales tax (also without Congress’ approval), but that apparently didn’t matter as there isn’t well defined jurisprudence on the compact clause. (If you’re a lawyer, feel free to leave a comment about this.)

The tabacco money was used to fund Ted Strickland’s homestead tax exemption, and now Ted Strickland is using it to plug holes in the budget, even though he and Rich Cordary do not even know if they are allowed to!

This once again proves that, in the end, the only ones who benefit are the lawyers… Especially well-connected lawyers like Rocky Saxbee, the head of the so-called “Republicans for Strickland” coalition, who profited greatly from the original settlement.

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