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HomeNewsArchivesPLANS PROCEEDING TO LEVERAGE TOBACCO FUNDS

PLANS PROCEEDING TO LEVERAGE TOBACCO FUNDS

May 1, 2001 – While thousands of Virgin Islanders were out celebrating Carnival in Charlotte Amalie last weekend, a few government officials were meeting to iron out details of the territory's Tobacco Funds Settlement signed into law by Gov. Charles W. Turnbull late in 2000.
Kent Bernier, the governor's assistant for economic affairs, said he met with Sen. Donald "Ducks" Cole and Luis Sylvester, Sen. Carlton Dowe's chief of staff, over the weekend to discuss a distribution vehicle for the tobacco funds. Such an instrument must be approved by the Legislature.
The tobacco settlement will bring the territory almost $50 million over a period of 25 years. The government is seeking to leverage that amount via a bond issue in order to benefit from a more immediate and economical use of the funds.
Bernier said Amadeo Francis, director of the Public Finance Authority, is attending a meeting in New York this week dealing with a Preliminary Official Statement, something that must be completed before the bonds go to market.
By law, the tobacco settlement proceeds are being distributed among the Health Department and the territory's two hospitals.
"What we are doing," Bernier said, "is taking the future revenues of the bonds to use as up-front money to improve health facilities. For instance, if the Roy L. Schneider Hospital needed a piece of equipment that costs $135,000, it would be able to get the equipment and put it to use right away, instead of having to wait for funding."
Attorney General Iver Stridiron announced on Monday that the Virgin Islands had received its annual payment, in the amount of $696,377, from the nationwide settlement on April 15. "With this latest payment, the V.I. has now received $2,426,894 in tobacco settlement proceeds," he said in a release, adding that the money was wire transferred to a Finance Department account at Banco Popular.
Eugene Woods, Schneider Hospital chief executive officer, said his hospital received a check for $462,186 in tobacco funds on April 25. Information could not immediately be obtained on funds received by the Health Department or the Juan Luis Hospital on St. Croix.
Stridiron cautioned that the nationwide tobacco settlement is still undergoing adjustments with regard to the payment levels to the states and territories. He said various disputes between the settling states and the tobacco companies may threaten the $208 billion, 25-year payout.
To deal with such matters, Stridiron said, all of the state and territorial attorneys general are required to attend meetings with representatives of the tobacco companies at least once a year for the life of the agreement. The first such meeting was held last year in Florida, he said, and the second will take place early this month in Washington, D.C.
The distribution of the tobacco settlement money coming into the territory has been the subject of heated debate. The original plan, hastily voted into law in 1998 in order to meet the deadline for suing the tobacco industry, called for splitting the money equally between the Health Revolving Fund and the Union Arbitration Fund. The unions claimed a right to the money because Luis "Tito" Morales, Central Labor Council president, had taken credit for informing the Legislature of the existence of the tobacco funds.
After several public hearings, the legislation was rewritten late in 2000, allocating 100 per cent of the money to health care. The Health Department is to receive 36 percent, earmarked for prevention, basic and long-term health care needs and health-related capital improvement projects. Each hospital is to receive 32 percent. The Schneider Hospital, which includes St. John's Myrah keating Smith Clinic, will use part of its proceeds for a cancer center, while the Luis Hospital will use its money for a cardiac treatment center and related capital-improvement projects.

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