Senate panel wants to break Nevada’s tobacco money habit
April 10, 2003
A Senate panel has advanced a bill to let the state treasurer sell off half of Nevada’s remaining tobacco settlement and tighten requirements for college students getting popular Millennium Scholarships.
The Government Affairs Committee approved SB448 on Wednesday, after Nevada Treasurer Brian Krolicki said he needed the flexibility to trade the anticipated settlement for a smaller, lump-sum amount when it’s cost-effective.
Krolicki says the deal would erase a risk that the tobacco companies might not exist or be able to pay off the higher amount years from now. The state’s original settlement amount was $1.2 billion, due over 25 years.
Nevada has managed its tobacco money better than some other states, and won’t need to make any immediate cuts in programs after Philip Morris announced it is considering bankruptcy due to a court ruling in Illinois that it post a $12 billion bond.
The bill allows Nevada to catch the next “window of opportunity” to trade part of its settlement for cash and reduce the state’s dependency on uncertain tobacco sales, said Sen. Bill Raggio, R-Reno.
Under a landmark settlement agreement between big tobacco companies and the states, Philip Morris owes $2.6 billion to the states by April 15. Nevada is expecting a $16 million payment by then.
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Some states have already been told they won’t get the money, though several have already spent it.
“These are uncertain economic times,” Sen. Terry Care, D-Las Vegas, said before the vote. “I don’t know if Philip Morris is bluffing. I’m just increasingly uncomfortable with the state becoming a shareholder in big tobacco, which is I think what is happening.”
The Senate panel passed the “half-securitization” bill 6-1 with opposition from Sen. Dina Titus, D-Las Vegas.
Nevada’s funds are used mainly for Gov. Kenny Guinn’s popular Millennium Scholarship fund.
The bill proposes that college students maintain a 2.6 grade-point average to continue getting the scholarships. The current requirement is a 2.0 GPA. It also requires students to complete their education in six years instead of the current eight.
The $10,000 state scholarships are awarded to graduates of Nevada high schools with at least a B average who go on to attend a Nevada college.
The suggested changes would not affect current scholarship holders, but would apply to those who start next semester. The bill would also gradually raise scholarship requirements for high school students from a 3.0 to a 3.25 average by 2006.