JOHNSTON, R.I. -- More than $16 billion is about to flow into New
England from the nation's tobacco companies, and the mayor of this debt-ridden,
blue-collar community is hoping for a few dollars to shore up roads, build a new
elementary school, and fix the sewers.
Mayor William R. Macera is just one of the many hundreds -- city
leaders, citizens, champions of all kinds of pet projects -- who now look to their state
capitols with great expectations.
For legislators already riding high on the booming economy, it would
seem a bonanza: millions of new dollars to dispense without a dime of new taxes. But as
lawmakers begin to compose their annual budgets, the newfound money has sparked a
contentious debate over where the money will have the most impact, whether the money
should be returned to taxpayers, and who should decide.
"It is the largest single windfall this region has seen in
recent memory," said Darrell West, chairman of the political science department at
Brown University. "It's real money."
The money comes from the November settlement of a lawsuit between the
states and the tobacco industry, and will begin flowing once 80 percent of the states
representing 80 percent of the settlement dollars receive their state courts' approval of
the deal. The states argued that they had spent billions of dollars caring for sick
smokers. The tobacco companies agreed to pay 46 participating states, including all of New
England, a total of $206 billion over the next 25 years.
There are virtually no strings attached to the money. One unresolved
issue remains, however: whether the federal government will try to recover some of the
settlement money to cover its Medcaid expenses, and whether it will try to impose
conditions on the state spending.
With so much cash on the horizon, lawmakers must decide whether to
take their millions and create new health programs, provide tax cuts, or launch
antismoking campaigns, among other ideas.
"When you have that kind of money coming in and have 150
legislators and a governor, you're going to get 151 proposals," said Paul S. Kelly,
Rhode Island's Senate majority leader.
It is quite a different problem from the one lawmakers grappled with
a decade ago. Then, New England was gripped by recession. In just four years, the region
lost 766,000 jobs. Unemployment averaged about 8 percent, tax revenues were low, and
states struggled to provide basic services.
Today the region is economically healthy, and all six states are
running surpluses, not deficits. Unemployment has hit a stunning 3.2 percent, well below
the national average of 4.3 percent.
"It's a wonderful feeling, fighting over where money's going to
go, rather than how to generate it," said Representative Alfred A. Russo Jr., who
hopes to send Rhode Island's portion to the cities and towns, including Johnston, his
In this suburb of Providence, dominated by modest, low-slung homes,
strip malls, and the state dump, the mayor knows what he would do with some of the tobacco
money. The rescue squad vehicle is expected to fail its upcoming inspection, and a
replacement will cost $110,000. The battalion chief's car has been grounded, too. The
school-age population has exploded and the town needs another elementary school.
And that doesn't take into account the aging sewers, the
pothole-ridden roads, and this year's $18 million deficit.
"We're desperate here," he said.
Macera would like just a little bit of the $63.9 million expected to
arrive in time for Rhode Island's budget in 2000.
"We need new fire stations, we need new schools. The sewers are
overflowing. Any money that comes into the state and that comes to the town will be well
spent," he said. "I can justify in five seconds what we need the money
Across the region, there are people just like Macera, all hoping and
even lobbying for some of the funds.
In Boston, Mayor Thomas M. Menino has already been squabbling with
Governor Paul Cellucci, pushing for money for Massachusetts' cities. Cellucci has rejected
Menino's advances, telling him that the cities are running surpluses and don't need the
extra dollars. While they bicker, $96.9 million awaits the Commonwealth in an escrow
And then there are the antismoking activists who look with dismay at
Macera, Menino, and others for wanting to use the money for anything other than health
care and tobacco control. Even though the states are legally free to spend the money as
they wish, the American Cancer Society, the Heart Association, and the American Lung
Association argue it should be used to help smokers quit and to prevent teenagers from
taking up the habit.
"This didn't just come out of the sky," said Margaret Kane,
executive director of the American Lung Association of Rhode Island, referring to the
settlement. "It's a direct result of tobacco-related illness."
That's a familiar argument to Donna Sytek, the Republican speaker of
the New Hampshire House.
"Health groups look at it and say, 'At last we'll be able to
expand smoking-prevention programs,' or those of us trying to balance the budget say,
'Good, $43 million would be very helpful,"' Sytek said. "Any time there's free
money forever, there's no limit to the imaginations of legislators."
Yet, the money is not forever. The payments stop after 25 years.
There are ways to make it last longer, however. Both Cellucci and Rhode Island Lieutenant
Governor Charles J. Fogarty have proposed putting the money in trust funds and using the
interest earned for programs.
One way or another, bolstering health care is a popular proposal.
Cellucci and Fogarty both would dedicate their trust funds for health care. In Vermont,
Governor Howard Dean said there is a consensus to use the money for prescriptions for
seniors and health care for children.
Other lawmakers want to use the money for tax cuts or to solve fiscal
problems. In Maine, Governor Angus King, an Independent, would return the money to the
voters in the form of tax cuts. In Rhode Island, Republican Governor Lincoln Almond would
put the money in the general fund, giving him leeway to fund existing programs.
In New Hampshire, Sytek wants the money to help pay for a solution to
the state's education-funding crisis. A court-ordered deadline is looming, forcing
legislators to devise a way to pay for public schools without relying on local property
Despite the prospect of riches to come, Fogarty sighs as he works to
put together a coalition to funnel the money directly to health care programs.
"Sometimes it's better to manage in difficult situations -- you
don't like what you have to do, but you know what you have to do," he said.