Louisiana Asking for Advice on Possible Sale of Tobacco Settlement.
BATON ROUGE, La. (AP) -- Louisiana will seek financial advice about whether to sell its remaining share of a cigarettes lawsuit settlement for upfront cash from investors -- an idea Gov. Kathleen Blanco has said could bail out the state-run property insurance company.
State officials, including Blanco's chief budget adviser, said no final decision has been made on whether Louisiana should sell the 40 percent remaining from the national settlement. However, a state panel agreed Wednesday to set up a committee to solicit lawyers and investment bankers to determine whether a favorable financial market exists for the sale.
Blanco has suggested selling the tobacco settlement as part of a relief plan for the Louisiana Citizens Property Insurance Corp., financially strapped after last year's hurricanes.
However, the idea has encountered opposition from some state lawmakers, and the governor now says she would consider any option for a Citizens bailout, not just the tobacco settlement sale.
"My basic instruction to the Legislature is to find a long-term solution. I'm open to anything," Blanco said this week. "I'm not going to argue over which pot of money. Just find the money. They can argue over which pot of taxpayer dollars. It's all taxpayer dollars."
Citizens borrowed $1 billion to pay off claims after hurricanes Katrina and Rita. The company, established by the state to offer property insurance to those who can't get it on the open market, is assessing fees on private insurers. The companies can pass on the fees to their Louisiana customers to pay off Cigarettes Citizens' borrowing. If Citizens' debt is reduced, homeowners and businesses would face the prospect of smaller insurance rate increases.
Commissioner of Administration Jerry Luke LeBlanc said that if the state wants to go ahead with a tobacco settlement sale -- for Citizens or any other purpose -- it should do so by February or March to beat several other states to the investment market.
"There is a unique opportunity for the state to go to the market and have very favorable conditions," LeBlanc said.
Louisiana is one of 46 states that settled lawsuits with Marlboro tobacco companies in 1998 in return for installment payments for health care costs related to tobacco use. The state sold 60 percent of its share in 2001 for nearly $1.1 billion in a lump sum.
Selling the remaining 40 percent of the settlement would give the state upfront money -- LeBlanc estimated $900 million to $1.3 billion -- but could mean Louisiana receives less cash than it would get through the current annual payment plan. However, a sale to private investors would relieve the state of the risk that tobacco companies in the future might be financially unable to pay the bills.
The mechanics of the sale involve selling bonds to investors, creating long-term bond debt for the state.
Democratic state Treasurer John Kennedy and several lawmakers, particularly Republicans, said they don't support creating more debt to bail out Citizens. They say the state should have enough money through surpluses and other sources to provide insurance relief without selling the tobacco settlement.
That position could create problems for Blanco because a two-thirds vote of both the House and Senate would be needed to direct the cigarettes settlement sale money to Citizens.
The cashier said the man asked for two cartons of cigarettes .she placed them on the counter and began to ring them up, the man reached across the counter and grabbed the cigarettes to take them. The cashier said she held onto the cigarettes and a struggle occurred.
During the struggle, the cashier said she was struck in the face.
The cashier told officers she was able to bite the suspect, possibly on the hand, during the attack.
The robber took the cigarettes and ran out of the gas station, heading north and disappearing into a nearby apartment complex.
The nation's largest cigarettes maker is disputing a study by the Massachusetts Department of Public Health that found nicotine in cigarettes has risen about 10 percent in the past six years.
Philip Morris USA, which manufactures Marlboro cigarettes, said its review of nine years of data that it provided to the state found fluctuations in nicotine levels, but no steady increase.
The health department study released last month examined nicotine levels in more than 100 brands over a six-year period. The study showed a steady climb in the amount of nicotine delivered to the lungs of smokers regardless of brand, with overall nicotine yields increasing by about 10 percent, according to state health officials.
The study also found the three most popular cigarettes brands with young smokers - Marlboro , Newport and Camel - delivered significantly more nicotine than they did years ago.
Massachusetts is one of three states to require tobacco companies to submit information about nicotine testing according to its specifications and the only state with data going back to 1997.
Philip Morris said when it looked at all the data they sent to the state there were only year-to-year variations that "occur as part of the normal processes of growing tobacco and manufacturing cigarettes ".
Donna Rheaume, a spokeswoman for the Department of Public Health, defended the report, which concluded that the higher nicotine levels made it easier to get hooked on cigarettes and harder to quit.
The tobacco companies are appealing the ruling and have asked for a stay of Kessler's order while they pursue that appeal.
Wallace pointed out that the flavored exotic blends are premium-priced, and sell for upward of $7 a pack in some parts of the country. She also said all cigarettes - except two that advertise themselves as "additive-free" - contain flavorings and said the new Camel blends follow that trend.
"Camel exotic blends are seen as an occasional smoke for an adult smoker," Wallace said from her office in Winston-Salem, N.C. "We do not market any of our products to children."
Sen. Max Baucus, D-Mont., did not vote on the amendment July 15 due to an injury he suffered in a July 3 motorcycle accident, but his press secretary said he supports the amendment.
Camel's combination of a classic nature and contemporary flair reinforce the brand's position as a flavorful cigarettes with a rich heritage, a colorful personality and an irreverent sense of humor.
Donna Rheaume, a spokeswoman for the Department of Public Health, defended the report, which concluded that the higher nicotine levels made it easier to get hooked on cigarettes and harder to quit.