House bill would relieve burden on tobacco farmers

Source from:  By Greg Wells, gwells@bgdailynews.com 02/04/2005

Kentucky tobacco farmers denied Phase II payments last year would receive much of that money under a bill unanimously approved by the House Budget Committee on Wednesday. Farmers would, under House Bill 132, be paid $114 million of the about $124 million they had been promised, said the bill's co-sponsor, Rep. Rob Wilkey, D-Scottsville. An emergency clause would require that the payments, already delayed by months, be made soon after the legislation is signed into law. "If this legislation is successful, it's our hope that we could get the checks out quickly, perhaps as soon as April or May," Wilkey said. "This is money that our tobacco farmers have counted on to create a budget for their farm operations over the past year. They've been placed in a very difficult situation and we feel like this is the best possible solution." The payments would be made to about 163,000 Kentucky tobacco farmers and quota holders. Under the proposal, $27 million would come from the state's master settlement money used to help farmers find alternatives to tobacco. Bonds would be issued to cover the rest, with the debt paid off by the master settlement money, also known as Phase I. Meanwhile, the Kentucky Farm Bureau has suggested another source for making the final Phase II payment to farmers – money from a proposed higher state cigarette tax. Farm Bureau President Sam Moore said Wednesday that relying on Phase I money would "severely restrict" agricultural diversification efforts. Fletcher weighed in on the issue Wednesday. The governor's office said a paragraph from Fletcher's State of the Commonwealth speech was omitted because of a "technical error." The deleted paragraph read: "As we move into advanced agriculture and natural product technology, I would like to encourage you to protect Phase I tobacco money for those purposes as we pay our farmers the Phase II money they are relying on." Last month, a North Carolina judge ruled that the federal tobacco buyout passed last October relieved tobacco companies of their Phase II obligation. The ruling is being appealed to the North Carolina Supreme Court. Wilkey said if the lower court's ruling is overturned, the proposed legislation would let the state get back all Phase I money that was spent to cover the Phase II payments. This bill fulfills a legal obligation Kentucky has made to its farmers, Wilkey said, adding that the state is required by law to use Phase I funds to cover Phase II payments up to $114 million if companies' Phase II payments fall below that amount. Wilkey said the measure, House Bill 132, would protect Phase I funds that are delegated to local councils that manage their own diversification projects. "We don't touch the funds that are budgeted for the community councils that allow farmers to decide what's best for diversification efforts in their own community," Wilkey said. "This bill will continue to allow them to make their own decisions on the local level." Enditem