HOLLISTER
San Benito County has nearly all of the $11 million it generated from liquidating bond assets related to the 1998 lawsuit settlement involving 46 states and four major tobacco companies, and officials next week are set to get a breakdown of spending criteria attached to the funds.
California’s portion of the $246 billion settlement was about $25 billion to be paid over 30 years. Under the agreement, the companies would disburse funds to the state’s 58 counties, which had full discretion over how to spend the money.
But San Benito County – along with others – sold its portion as a “future benefit” in the bond market for a more immediate return and gradually collected the full amount, with the final $1.6 million of the $11 million total allocated about two years ago, County Administrative Officer Susan Thompson told the Free Lance. The county had received most of the money – around $8 million – by early 2003, according to Free Lance archives.
County officials through the years have held some dialogue on potential uses of the funds – such as talk in 2003 of using $250,000 to convert the former convalescent hospital into office space, using another $1 million that year for road overlays and last year of using $2.6 million in settlement dollars on a local match for the future jail expansion.
Assistant Auditor Larry Chapin said to this point, though, the county had spent just $72,000 of the $11 million through public works, last year. He acknowledged there had not been any structured program established for use of the $11 million.
Chapin noted how county officials are putting together a five-year capital improvements program – they do not currently have one, he said – which could align with the use of those settlement funds.
“We’re trying to get it better, more long term,” he said.
He went on, regarding the tobacco dollars: “It’s like, ‘Oh, good, we’ve got that money. What are we going to do with it?'”
Thompson explained that when municipalities entered into such bond transactions, the funds at the outset were non-discretionary and had to go toward capital projects. Over time, however, the restrictions were set to expire.
It is unclear which portion of the $11 million potentially has become discretionary. Thompson said she is waiting for a report from the auditor’s office on the tobacco dollars, which currently are scattered across various funds, so she can break down the spending criteria to supervisors at their April 28 meeting.
Some supervisors noted how it is important to figure out which portion is restricted before moving ahead on planning for the funds.
Supervisor Jaime De La Cruz said he prefers the funds go toward health care because that was the original point of the settlement.
“Once that list is identified, we want to ensure it goes toward health issues,” he said. “Again, it’s just one supervisor. Every other supervisor might have their own opinion on how to use those funds.”
Supervisor Anthony Botelho said he wants the focus to be on capital improvements.
“I have a concern when we use one-time monies for ongoing expenses,” Botelho said. “Philosophically, my view is that it would be better used for capital needs.”
Supervisor Reb Monaco, however, said he believes the board should consider the importance of keeping the budget in the black, as it traditionally has been, and saving much of the money.
“I hope my fellow board members agree we really need to be cautious and conservative with that funding,” he said.
