One of the more critical proposals on the Michigan ballot this
November is the controversial Proposal 4. In the interest of better
informing the electorate, we present the following analysis on 'Prop 4',
beginning with the actual wording.
A PROPOSED CONSTITUTIONAL AMENDMENT TO REALLOCATE THE "TOBACCO SETTLEMENT
REVENUE" RECEIVED BY THE STATE FROM CIGARETTE MANUFACTURERS
The proposed constitutional amendment would:
Annually allocate on a permanent basis 90% (approximately $297 million) of
"tobacco settlement revenue" received by state from cigarette manufacturers
as follows: $151.8 million to nonprofit hospitals, licensed nursing homes,
licensed hospices, nurse practitioners, school-linked health centers and
Healthy Michigan Foundation; $102.3 million to fund programs to reduce
tobacco use, Health and Aging Research Development Initiative, Tobacco-Free
Futures Fund, Council of Michigan Foundations and Nurses Scholarship
Program; and $42.9 million to the Elder Prescription Drug Program.
Guarantee recipients funding at 2001 appropriation levels plus additional
state funds on an escalating basis for nonprofit hospitals, licensed
nursing homes, licensed hospices and nurse practitioners.
Vocal Opposition
Opponents to this Proposal assert that some of the country's most
powerful lobbies are aiming to reach deeper into the pockets of taxpayers
and take back the Michigan Merit Award Scholarship money that the
legislature allocated from the tobacco settlement and that has been
promised to students since 1999.
The award is granted to Michigan high school students who pass the Michigan
Educational Assessment Program test. Students are given up to $2,500 to
attend in-state colleges and universities and $1,500 for out-of-state
schools. Some students opt to split the award money between their freshman
and sophomore years of college.
Because the legislature, which consists of elected representatives, decided
to allocate tobacco settlement money to educational programs designed to
alleviate the burden of higher education on middle class families,
opponents claim that private organizations are trying to get their hands on
90% of the annual $300 million of tobacco settlement funds through a
constitutional amendment that subverts the power of elected officials to
allocate funds. Moreover, there are no provisions for oversight of those
funds.
Because no strings are attached to the tobacco money, the legislature of
each state determines allocations, and it does not have to attach to health
initiatives of any kind. Some of the funds have also been spent on health
research as well as to the general fund for police protection, but it is
important to understand that there is no 'mandate' as to how any state must
spend the money. For example, in the state of North Carolina, some of
their tobacco settlement money is spent on drying kilns for tobacco farmers.
Former attorney general Frank. J. Kelley is perhaps the most vocal opponent
of Proposal 4, and recently joined the growing ranks of People Protecting
Kids & the Constitution, the lobbying group opposing Prop 4.
"The original idea of suing tobacco companies began in 1994 as the
brainchild of attorneys general Mike Moore of Mississippi, Hubert Humphrey
of Minnesota, myself and a few other attorneys general," explains Kelly.
"We knew full well that no one had been very successful in suing tobacco
companies in the past. Therefore, we would have to come up with a unique,
provable theory of damages to sustain a successful suit. And, as it turned
out, we did."
"We planned that each state would sue for health damage costs paid by the
state to treat its citizens and its own retirees for cancer, emphysema,
heart disease and other illnesses that the state would claim were cause by
an addiction to cigarettes and other tobacco products."
"We eventually would get 50 state and 4 territories to start suits in each
state and territory, thus forcing the tobacco companies to defend 54
multimillion-dollar lawsuits at one time - something they never had to do
before. Tobacco companies for the first time were paying many millions of
dollars a month to defend these suits."
"The threat of billions of dollars in damages that could come from these
suits proved too much to bear for the tobacco companies, and they began a
dialogue with the state attorneys general to try to settle all the
litigation," continues Kelley.
"When I started the suit for Michigan in 1996, it was on behalf of the
State of Michigan by and through Frank J. Kelley, attorney general. I had
the cooperation of Governor John Engler and the state agencies involved."
"My staff asked hospitals, health groups and other private health agencies
to help me by joining in the lawsuits and assist by proving their damages
as well as mine. NO hospital or health group would join me, help me
financially or render assistance. On a personal level, Dr. Ron Davis, who
was representing the Michigan Medical Association, endorsed my suit, and so
did Raj Weiner."
"Sparrow Hospital, which was not a part of the petition drive and current
ballot proposal, provided me a room for my initial press conference
announcing the suit."
"Other than that, as a matter of fact, no other hospital or private health
organization would help me. They gave me no encouragement. Newspapers at
the time said my effort was foolish and that I was being anti-business."
"Ironically, the very same groups who would not help me or join forced with
me in my tobacco case - and never claimed damages in the case - now want to
steal from the State Treasury my yearly damage payments that Big Tobacco is
court-ordered to pay the state for its losses - not private hospitals,"
asserts Kelley.
"Without any help or encouragement from out state's hospitals or their
administrators, I recovered the largest lawsuit damage award in our state's
history, approximately $8-1/2 billion. With interest and inflation it was
computed to go as high as possibly $16 billion. And these payments will go
on indefinitely, as long as the defendant tobacco companies are doing
business in my state."
"As a footnote, I want you to know that the people who are pushing this
greedy tobacco proposal claim that as a 501C they would account for the
money they received from this scheme to the public. That is a deliberate
misrepresentation."
"They were well aware at the drafting of the proposal that under a
published opinion of the attorney general, Volume 1989-90, Opinion No.
6563, at pages 34 and 35, it clearly points out that private bodies such as
those trying to get their hands on this money are not subject to the
Freedom of Information Act."
"As a matter of law, they would have their hands on $300 million a year of
the people's monies that should go to their public treasury. These wrongful
takers wouldn't have to publicly account for a penny of it."
Recently, the Michigan State University Board of Trustees also came out in
opposition to the so-called 'Citizens For a Healthy Michigan' proposal,
noting that it is 'unhealthy public policy.'
Voices of Support
Supporters of the Healthy Michigan Amendment claim that Michigan continues
to rank last in the nation for failing to use any of its tobacco settlement
money to protect kids from tobacco.
A coalition of health care and anti-tobacco groups is pushing for the
Healthy Michigan Amendment, which would direct 90 percent of the state's
$8.5 billion tobacco settlement toward health care programs. A large
portion of that money now is used to pay for the Merit scholarship program.
They claim if Prop 4 passes, $45 million per year will be earmarked for
tobacco prevention.
The U.S. Centers for Disease Control and Prevention (CDC) recommends that
Michigan spend a minimum of $54.8 million a year to have an effective,
comprehensive tobacco prevention program.
Recently the Michigan Legislature missed an opportunity to fund a
comprehensive tobacco prevention program when it failed to provide any
money for that purpose even while increasing the state cigarette tax by 50
cents.
"By failing to fund tobacco prevention, Michigan's leaders have let down
the state's kids and taxpayers," said Matthew L. Myers, President of the
Campaign for Tobacco-Free Kids.
Only four states - Maine, Minnesota, Mississippi and Maryland - currently
fund tobacco prevention programs at the minimum levels recommended by the
CDC. Given this fact, supporters claim that the money was not intended to
fund any scholarship programs, but to ease the strain the state's medical
infrastructure has felt in dealing with tobacco-related diseases.
Supporters of Prop 4 also feel that lawmakers view the tobacco fund as a
way out of Michigan's budgetary problems and that the money should not be
used to patch the hole in this election year's shoddy budget.
Supporters of Prop 4 also feel that the scholarship program, while
worthwhile, only helps a limited number of students through two years of
college. As one parent noted off-the-record, "I make $400,000 a year and
my kid got offered a $2,500 scholarship. Frankly, I find that embarrassing."
Supporters of Prop 4 also point out that some Michigan public universities
and education organizations also attacked the Healthy Michigan Amendment
because they are benefiting from the politicians' raid of the tobacco
settlement.
Michigan universities have boosted tuition 20 percent on average in the
past four years alone. They have also pocketed 20 percent increases in
state funding over the past four years, while Michigan's health care
providers have received about 3 percent more in state funding over the same
period.
Conclusion - Good Cause, Bad Precedent
While it is undeniably true that the Michigan Legislature should
have allocated more funding from the tobacco-settlement to health care
concerns, given the fact that the Engler Administration has underfunded
many health concerns such as long term care for the elderly, along with
reimbursing hospitals for Medicare payments, the thought of writing this
special dedicated funding into the Constitution sets a dangerously bad
precedent.
The fact remains that we elect our legislators to make spending decisions
and our recourse, if dissatisfied with their decisions, is found in the
voting booth.
Moreover, as former Attorney General Frank Kelley points out, a loophole
exists that these private organizations would neither have to account nor
report how they spent that money to the public.
This sets a dangerous precedent.
The bottom-line - worthwhile cause, but bad law.
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