OKLAHOMA CITY (AP) -- The $2.3 billion in tobacco money expected to flow into Oklahoma during the next 25 years should not be spent on recurring expenses, a panel of financial experts said Tuesday.
That was the only definitive recommendation to Gov. Frank Keating and legislative leaders in a report issued by an advisory group headed by state Treasurer Robert Butkin.
The group listed several options, depending on the goals of Keating and lawmakers. The options included creating a trust fund and spending only the interest or issuing tobacco bonds for capital construction.
Butkin said he still favored the trust fund approach.
"I believe the most sound employment of the tobacco settlement monies, from both a fiscal and ethical perspective, is the creation of a long-term permanent trust fund, with the earnings dedicated primarily to treating smoking-related illnesses, anti-smoking
education programs, smoking cessation programs, maternal health and other health care needs," the treasurer said in a letter to
Attorney General Drew Edmondson has taken a similar position.
But Keating, in a talk to a group of senior citizens Monday, raised the possibility of discounting the $2.3 billion settlement,
taking a smaller amount up front for state needs.
Under such an arrangement, referred to in the Butkin report as "securitization," the state would receive the proceeds from a bond issue and pay the debt with settlement payments.
Keating pointed to the possibility that a drop in tobacco consumption will reduce the amount of money the state is scheduled to receive under the settlement.
Butkin said outside analysts expect cigarette smoking to decline by 2 percent in the next 30 to 40 years, but that is taken into consideration in the tobacco settlement, which also includes a minimum 3 percent inflation increase in the annual payments.
The report said if the goal of leaders is to use settlement money for an accelerated capital construction program, the best option is a tax-exempt bond issue, using tobacco payments to retire the debt.
In addition to Butkin, panel members were William Crawford of Frederick, appointed by House Speaker Loyd Benson; H.C. Gene
Rainbolt of Oklahoma City, appointed by Keating, and Charles Schusterman of Tulsa, appointed by Senate President Pro Tempore