| Today's Feature
A
Matter of Convenience.
A proposed swap of road
maintenance responsibilities is under
consideration by the City Council.
The City currently maintains
Central Avenue from Garrison east to
approximately the first bridge as 96 turns back
north. The State maintains Fairview Avenue (Route
E) from Garrison Avenue east. The proposal is for
the two to swap responsibilities. The City would
then maintain Fairview to the East City limits or
approximately at Buena Vista Avenue, a total of
about one and a quarter mile.
Mayor Kenneth Johnson has
stated that feels it will be easier for both
entities if the swap is approved by the Council.
City street crews will maintain Fairview through
the City and the State will have all of Central.
From the information Johnson is
aware of, the City has maintained this short
piece of Route 66 since it was built.
The Mayor also reports that he
has received a letter from MODOT concerning the
repair of the bridge damaged when the small bus
ran through the rail. The letter states that the
bridge will be repaired now by state personnel.
Historic repairs could be considered if local
funding is available.
GUARANTEED
REVENUES VERSUS LONG TERM RISK.
by Steve Hunter, Representative District 127
Without the usual state fly
around or multiple press conferences, last week
the Governor signed into law Senate Bill 1191.
This bill will allow Missouri to sell the rights
to $600 million in future tobacco settlement
funds in exchange for nearly immediate cash; a
practice often referred to as
‘securitization’. This would decrease
the risk associated with the possibility of not
receiving future tobacco settlement payments,
should tobacco companies declare bankruptcy,
close their plants, and move their operations to
foreign countries.
When the tobacco settlement
agreement was reached, revenue projections
indicated that our state would receive about $6
billion. However, national trends indicate that
tobacco use is on the decline, which will
decrease the revenues that are to be received by
our state. Because these projections may continue
to decrease in the future, proponents of
‘securitizing’ these funds argue that
Missouri should take what it is guaranteed to get
now, rather than risk getting little to nothing
in the future. Under Senate Bill 1191, the rights
to up to one-third of these projected payments
will be sold to a company and bonds will be
issued. Potentially, the bonding company would
assume the risk associated with any defaults on
payments by tobacco companies, in exchange the
state would receive an estimated thirty cents on
each dollar sold in rights to future tobacco
settlement payments. In effect, this legislation
weighs the high level of risk associated with
receiving payments from tobacco companies over
the next twenty five to thirty years that may not
continue to exist, against the security of
receiving fewer revenues now.
One major concern that I have
expressed regarding the securitization of these
funds is that our state should ensure that much
of the tobacco settlement revenues are used for
tobacco prevention programs. In 2002, more than
$500 million in tobacco settlement funds were
appropriated by the legislature. Specifically,
the legislature appropriated $22.2 million in
2002 for tobacco use prevention programs, but the
Governor has used all but $400,000 of these funds
to cover holes in the budget elsewhere. Only
$466,000 of the appropriated $167 million in 2003
tobacco settlement funds will be used for tobacco
prevention programs. These funds should be used
only for the original purposes of the tobacco
settlement.
Additionally, the legislature
had appropriated $21.6 million in tobacco
settlement funds to be spent in the 2002 budget
on life sciences research, but the Governor has
used all but $463,000 to cover shortfalls in the
budget. Unfortunately, not one penny of tobacco
settlement funds is appropriated for life
sciences research in the 2003 budget.
Funds received from the sale of
rights to a portion of future tobacco settlement
revenues will be subjected to restrictions on how
they can be spent to avoid jeopardizing our
state’s triple A bond rating. These
restrictions may prevent securitized revenues
from being used in a manner consistent with the
original purpose of the tobacco settlement
agreement. However, when faced with a less than
certain future for tobacco companies as they now
exist, selling off the rights to one-third of
future tobacco settlement payments may prove to
be a wise decision. In fact, more than 40 state
and local governments have securitized all or
part of their tobacco settlement revenues.
If spent wisely, the sale of
rights to future tobacco settlement revenues may
provide some financial stability in the coming
years. However, in light of the Governor’s
unwillingness to provide long term solutions to
our state’s budget difficulties,
securitization may provide a guarantee to
additional revenues that may not have been
received in the future, but without steps to
control state spending and limit government
growth, Missouri’s budget problems are only
beginning. Long term solutions like performance
based budgeting and revisions to how our state
devises revenue estimates must be adopted or the
next three years could be some of the most
financially challenging in our state’s
history.
As usual, I can be reached at
(573) 751-5458 or at Room 103 BB, State Capitol,
Jefferson City, MO 65101, or by email at
shunter@services.state.mo.us if you have any
questions or comments.
Commentary
Martin "Bubs" Hohulin
State Representative, District 126
Sorry about missing last
week’s column. Between the custard shop,
farming, campaigning, and the boys’ baseball
games and practices, I just didn’t get it
written. I have often wondered if anyone reads
these columns and due to the large number of you
that asked where last week’s column was, I
guess you do. I appreciate that you take the time
to read it.
One of the issues that drew a
lot of attention this past Session was the St.
Louis baseball stadium. It drew a lot of
attention from all over the state, both for and
against. While most of the letters and phone
calls I received were against the stadium, I did
receive more letters of support than I thought I
would.
The Cardinals made a lot of
noise that they would move to Illinois if they
didn’t get public money to help build a new
stadium. I really think that is a bluff. If they
move to Illinois, they would probably move to
East St. Louis. Have you ever been to East St.
Louis?
One of the St. Louis area
representatives got in a lot of trouble for
saying that they wouldn’t move to East St.
Louis because of what that area is like. I guess
I will get in trouble with him. That area has a
lot of crime and gang activities. He was called a
racist for saying that. I will say it with him.
That area has a lot of crime and gang activities.
If the Cardinals want to move there, they can hop
right to it.
In all honesty, the stadium
proposal was not nearly as bad as many of the
stadium proposals around the country. The
Cardinals were going to be responsible for more
money than most teams. That being said, two
questions still remained. The first was do the
citizens of Missouri want to pony up for another
stadium and the second was whether or not paying
for sports facilities is a necessary government
activity. There can be an argument made that it
is no different than spending money to get a
major manufacturing company to stay in Missouri.
The main difference is that instead of 10 dollar
per hour workers, we are talking about multi
millionaire players and families having to lay
out 100 bucks just to go to a game.
Because of things like that as
well as talks of another strike, there is also a
declining interest in Major League Baseball among
the fans right now. In light of all that, do we
want to be investing millions in a new baseball
stadium?
I was elected the first time in
large part because of my opposition to the domed
football stadium in St. Louis. I mentioned to
another representative that I was elected on that
issue and that I wasn’t going to be stupid
and vote for it. He said that he voted for the
domed stadium and as a result was defeated in the
next election. He said that he wasn’t going
to be stupid twice.
In the end the issue passed the
Senate but never came up for debate in the House.
I seriously doubt if it would have passed. It
will be interesting to see what happens next
Session when half of the members are brand new.
Stay tuned.
As usual, I can be reached at
House Post Office, State Capitol, Jefferson City,
MO 65101, or 1-800-878-7126, or
mhohulin@services.state.mo.us for your questions,
comments, or advice.
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