TOPEKA, Kan. (AP) - A major U.S. bank gave a presentation in October to Kansas finance officials on handling the state’s future tobacco settlement money, a move that raised concerns among child advocates who say selling those payments to raise cash for the budget deficit would hurt the state’s early childhood system.
A copy of the 26-page Citigroup presentation, provided to The Topeka Capital-Journal (https://bit.ly/1UlQTWX ) by Kansas Action for Children, said the bank “pioneered the tobacco bond market” and shows which states have securitized.
“Tobacco securitization bond proceeds have been used for a variety of purposes; capital projects, working capital, endowments and pension funding,” the presentation document said
KAC officials alleged during a Tuesday hearing that Gov. Sam Brownback’s administration was considering selling the future tobacco settlement payments to generate upward of $400 million to help close the budget deficit.
Brownback spokeswoman Eileen Hawley told the newspaper that Tim Shallenburger, president of the Kansas Development Finance Authority, other KDFA officials and Brownback’s budget director Shawn Sullivan attended the meeting.
“There is no deal or pending legislation to sell tobacco settlement money,” Hawley said. “Several months ago, a presentation was made to state officials about securitization of future tobacco settlement money to Kansas.”
Lawmakers are mulling legislation that would shift special revenue funds, including the state highway fund and Children’s Initiative Fund into the state general fund. Proponents argue Senate Bill 463 would offer greater transparency and accountability over the use of the funds, but opponents say the purpose is to allow for the securitization of the tobacco funds.
“This development indicates that Senate Bill 463 is not about transparency or prioritizing, as budget director Sullivan suggested,” Shannon Cotsoradis, CEO of Kansas Action for Children, said of the Citigroup meeting.
She added: “This proposal could decimate Kansas’ early childhood system indefinitely and wreak even more havoc on the state’s already poor fiscal health. Despite the administration’s claims, it is now apparent this option has been on the table for months.”
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Information from: The Topeka (Kan.) Capital-Journal, https://www.cjonline.com
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