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June 26, 2007

Update: AG Lynch signs off on using tobacco funds

PROVIDENCE -- Attorney General Patrick C. Lynch signed off today on bond authorization needed to use millions of tobacco settlement dollars to shore up the state budget. He did so, he said later, after the signing document was revised.

"With the important revisions that have been made, literally within the last two hours, however, I believe Rhode Islanders are better protected than they had been previously, and I have signed the document," Lynch announced in a late-afternoon statement.

People across state government -- including legislators and officials in the governor’s office and the state budget office -- had been waiting to see if Lynch would decide on whether to sign the bond authorization or not after he signaled concerns last night.

The recently adopted state budget includes using $22 million of anticipated tobacco-settlement bonds to end the current fiscal year in the black. And about $153 million in tobacco funds also will be used to balance the 2007-08 budget, despite Governor Carcieri's vocal opposition.

Lynch, who must approve such bonding authorizations, had said yesterday that he might not be ready to do so by a 3 p.m. deadline today because he and his staff had not had enough time to review the bond documents and their implications.

The Master Settlement Agreement included technical and complex conditions the state must continue to meet in order to receive money, Lynch said.

"It's my job to slash through the technicalities and, ultimately, make the promise that the state of Rhode Island is continuing to comply with the terms of the MSA because, absent such compliance, the spigot could be turned off," said Lynch.

-- With reports from Journal staff writer Elizabeth Gudrais and projo.com staff writer Michael P. McKinney

Lynch said he had concerns -- and still does -- about how lawmakers and the governor intended to spend the money, how it is prioritized in the budget.

In the governor’s office earlier today, spokesman Jeff Neal said the state will have enough cash on hand to get through the fiscal year, which ends Saturday, without implementing any emergency measures, even if Lynch did not sign the bond authorization by today’s deadline.

Lynch complained yesterday that he was being rushed and the tobacco money comes with strings attached.

At issue was the attempt to raise $154 million for next year’s budget -- and another $20 million to finance shortfalls in this year’s budget -- by selling a portion of future payments from the tobacco master settlement, a 1998 agreement by tobacco companies and 46 states designed to recoup the societal costs of smoking.

Posted by Mike McKinney at 6:56 PM | Permalink

June 26, 2007

Update: AG Lynch signs off on using tobacco funds

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