Senate OKs bill to sell tobacco settlement

Thursday, April 26, 2001 | 10:58 a.m.

CARSON CITY -- A bill that would allow the state to sell off its $1.2 billion tobacco settlement and avoid the risk of cigarette companies deciding not to make future payments was approved Wednesday by the Senate.

The bill, however, could face trouble in the Assembly, where some members have questioned the wisdom of selling off the debt and receiving only $400 million.

Senate Bill 488 sets up a system to allow state Treasurer Brian Krolicki to sell off the debt to investors. Money received by the state would then be invested.

Sen. Bill O'Donnell, R-Las Vegas, said this plan would secure the money to fund Millennium Scholarships and health programs being financed by tobacco settlement money.

"The state is selling off the cash flow," O'Donnell said in debate, which started Tuesday and carried over into Wednesday. "We will take the money and invest it. If we invest it at 8, 9 percent, we will receive the same dollar amount in 20 years."

O'Donnell said it would be more risky to depend on the tobacco companies to provide this money over the next 20 years. It would ensure Nevada has the cash, as opposed to the possibility of it holding an empty bag.

Senate Minority Leader Dina Titus, D-Las Vegas, called the bill a "money scheme," and only two states -- Alaska and South Carolina -- have done this.

Nevada, she said, would lose millions by selling off this debt. "There is a greater risk to do it than not to do it," she said.

In addition, she said the four tobacco companies could buy off the debt and save themselves millions.

In selling off the debt the bill says the state is not liable if the tobacco companies do not pay the investors.

The vote was 18-3 with Titus, Maggie Carlton, D-North Las Vegas, and Joe Neal, D-North Las Vegas, dissenting.