State House Sound Bites

Capitol reporter Katie Meyer covers Pennsylvania politics and issues at the Pennsylvania state capitol.

State to fill budget holes by borrowing against tobacco fund

Written by Katie Meyer, Capitol Bureau Chief | Nov 15, 2017 3:05 AM

The state will borrow against its Tobacco Settlement Fund to finish the budget. But some are concerned the plan will detract from anti-smoking programs. (Photo by AP)


(Harrisburg) -- Pennsylvania is going to borrow against its Tobacco Settlement Fund to fill in last year's deficit and finish this year's budget

The Wolf administration confirmed Tuesday that it will tap into the stream of money states have received from tobacco companies since the 1990s.

The borrowing will give the commonwealth money to balance its books up front, and will then be paid back over several decades.

The Commonwealth Financing Authority approved the plan Tuesday. However, Budget Secretary Randy Albright noted that it's not finalized yet.

"The resolution today simply allows staff at the CFA to put together a professional team, and go out and ascertain in the market what the most cost-effective financing plan should be," Albright said.

Currently, the Tobacco Fund allocates nearly 16 million dollars annually for smoking cessation programs, according to the American Lung Association.

Wolf Spokesman JJ Abbott said the borrowing won't affect that money.

But the association's Deb Brown said she's still worried.

"Unless they're going to take money from somewhere else and invest it in these programs at the same level, it has to impact the programs," she said. "There's no other way to look at it."

Abbott responded that the budget bill "specifies that Tobacco Settlement Funds will be distributed by the same formula as in the past two fiscal years." He added, the fund won't have to make any payments for two years. 

The tobacco plan was one of two borrowing proposals being considered to fill in budget holes. The other would have securitized profits from the state-run liquor industry.

This story has been updated to include the Wolf Administration's response to concerns about tobacco cessation funding. 

Published in News, State House Sound Bites

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