Virginia tobacco money not spent wisely, some critics say

RICHMOND

Ten years after a historic settlement with cigarette manufacturers, Virginia has invested about $600 million of the damages it received in revitalizing depressed regions that once thrived on tobacco farming.

The cash has been used to retrain tobacco workers, improve industrial sites, attract business and lay cable for high-speed Internet access across Southside and Southwest Virginia.

"I can assure you that without access to the capital that's been invested in our communities, we would be in economic devastation," said former state Sen. Charles Hawkins, R-Pittsylvania, who heads a commission that distributes settlement money to the regions.

Critics, however, worry that many Southside and Southwest politicians view the settlement as a pork fund for popular projects in cities and towns that have no broad effect in uplifting the regions. The panel that disburses the money was criticized earlier this year, in a blue-ribbon review headed by former Gov. Gerald L. Baliles, for not investing enough to improve junior college and college educational opportunities.

There is also debate over whether the state has invested a large enough share of the money in youth anti-smoking programs.

Overall, Virginia has received $1.2 billion in damage payments from the tobacco companies. It was among 46 states in late 1998 that agreed to split $206 billion over 25 years from the nation's largest cigarette manufacturers. In return, the states agreed not to sue the companies to recover future health care costs related to smoking.

Virginia will receive about $136 million this fiscal year. According to a formula approved by the General Assembly, 50 percent will go to Southside and Southwest Virginia, 10 percent to anti-smoking programs and 40 percent to the general state budget.

A coalition of national health groups earlier this week called on Virginia to increase its 10 percent share - $13.6 million this year - earmarked for anti-smoking campaigns. The U.S. Centers for Disease Control and Prevention says the state needs to spend $103.2 million annually for a top-flight program that would include steady television advertising.

A report by the health care agency's national health organization ranked Virginia 36th among states in spending to dissuade children from smoking.

"We call on Virginia's leaders to keep the promise of the settlement and increase funding for tobacco prevention," Matthew L. Myers, president of the Campaign for Tobacco-Free Kids, said in a statement. "Tobacco prevention is a smart investment that reduces smoking, saves lives and saves money by reducing tobacco-related health care."

The General Assembly is not likely to expand anti-smoking programs any time soon. Lawmakers this winter will be looking for ways to cut overall state spending to overcome at least a $2.5 billion shortfall in revenue needed to balance Virginia's budget.

Legislators set up the Virginia Tobacco Settlement Foundation to disburse grants for anti-smoking programs.

Foundation officials say their polls indicate that 15.5 percent of high school students smoke - a decrease of 6.2 percent since 2001.

Despite complaints that Virginia is not spending enough to stop youth smoking, officials say Virginia may be in better shape than most states. Twenty percent of high school students nationwide smoke, according to polls.

"We're very proud of our results," said Richard Foster, a spokesman for the foundation.

In addition to paying for programs that reach children of all ages, the foundation gives grants for anti-smoking research at state universities. Among the studies: how neural processes are altered by adolescent nicotine addiction; what biological and social conditions lead children to smoke; and whether any special factors lead African American youths to use tobacco.

The foundation also funds undercover inspections to see whether retailers are illegally selling cigarettes to minors. The incidence of violations has decreased from 27 percent at the start of the decade to 8.7 percent this year, according to Foster.

Grants to revitalize Southside and Southwest Virginia are controlled by the 31-member Virginia Tobacco Indemnification and Community Revitalization Commission. The panel includes 10 legislators from the affected regions, three members of the governor's Cabinet and a variety of local officials and tobacco farmers.

The commission has provided more than 970 grants in 41 localities across the two regions. It has paid for the installation of more than 1,600 miles of fiber-optic cable, water and sewer improvements; expansion of community education centers; and incentives to keep existing businesses in the tobacco regions.

Officials say the investments were central to furniture retailer Ikea's decision in late 2006 to build its first North American plant in Danville.

The 1-million-square-foot factory, which will provide 740 jobs, is slated to open early next year.

The Baliles report said the commission is "unusually large," and its members have been overly focused on local projects for their cities, towns and counties instead of "larger, more regional projects in scope that can truly transform the economy."

The report faulted the commission for an unwieldy process in doling out grants that "increases political considerations" and "causes difficulty in making decisions based on a strategic plan."

The study also lamented that of the $261.5 million in settlement money that was spread in the regions over the past three years, only $63.5 million were grants to improve education. Noting that young people are leaving the area, the report recommended spending more money to expand community colleges, technical schools, satellite learning, programs for high school equivalency diplomas, and "last-dollar" scholarships for needy students.

"Education from preschool to high school to beyond high school is the future of Southside and Southwest Virginia," the report said. "No miles of highway constructed, no tens of thousands of feet of water or sewer lines laid, nor any number of industrial park buildings erected can change this."

Warren Fiske, (804) 697-1565, warren.fiske@pilotonline.com