Move to Tap Tobacco Money in Suffolk

Source from:  BY RICK BRAND | rick.brand@newsday.com March 19, 2008  03/20/2008

The Suffolk Legislature has taken the first step toward selling the rights to future tobacco settlement money for up to $50 million in upfront cash next year. But foes say that while the move may be a boon to Wall Street, it could be a long-term bust for future taxpayers. The lawmakers voted 14-4 shortly before midnight Tuesday for an emergency resolution to create a local development corporation to solicit proposals from Wall Street firms on how to structure the deal -- which will ultimately have to be brought back to the legislature for final approval. Legis. Cameron Alden (R-Islip) said any deal would create "tens of millions of dollars in fees" for Wall Street but hurt taxpayers in the end. "It's a bad route to go and a bad solution to a problem that has not been fully identified," Alden said. Another critic, budget committee chairman Ricardo Montano (D-Central Islip), denounced the measure because it would largely cut out the legislature from any input on how to best structure the plan. "This circumvents the committee process," Montano said. "This is an ugly option, but these are not pretty times," said Legis. Brian Beedenbender (D-Centereach) a member of a bipartisan committee that has put forward the securitization idea as among several ways to close the estimated $130 to $154 million budget shortfall the county is facing next year. Presiding Officer William Lindsay (D-Holbrook) said he was undecided about going ahead with the sale of tobacco rights, but added, "I want to see the numbers. The fact of the matter is we need a lot of money and need it quickly." Earlier Tuesday, County Executive Steve Levy said the idea was to sell the five or six years of future rights to the county's $24-million-a-year annual share of a 1998 tobacco lawsuit settlement that involved 46 states. Levy aides added that the county would not sell the rights for any year prior to 2012. Levy said the move would give the county $50 million next year and an unspecified amount of additional money in the next few years to help solve Suffolk's fiscal woes. He estimated that the county would use the money to retire a total of $250 million in debt, eliminating future interest costs. But critics warned that earlier tobacco proposals had ultimate price tags of more than $300 million, and in the past were assailed by Levy's own top budget aide. Legis. Edward Romaine (R-Center Moriches) said Levy is saying "trust me," but would force the county to make repayments "in future years after the current county executive is out of office" -- a decision Romaine said taxpayers would later rue. But Legis. Louis D'Amaro (D-North Babylon) said the county is "in cardiac arrest" and needs action now. "You can only repent for the rest of your life if you are living," he said. Enditem