CATEGORY: EDT Editorials
Editorial, Friday, Feb. 26, 1999
The most effective tests given students always include hard questions requiring the fullest use of their knowledge about the subject under examination.
Legislators face that kind of questioning in the debate about spending and/or investing Mississippi’s $4 billion share of the tobacco lawsuit settlement.
The House strongly favors investing the money in a trust fund, allowing the interest earned to pay for the state’s share of various health care programs.
The Senate’s Public Health and Welfare Committee approved a bill Wednesday afternoon that would send 25 percent of the annual tobacco settlement payments during the next 25 years into a trust fund and make 25 percent available to the state’s general fund.
The bottom line this year would be about $146 million for the general fund, if the Public Health and Welfare bill were to become law. That committee’s bill, however, will be questioned extensively in its next committee forum Senate Finance. Chairman Hob Bryan of Amory, among others, believes the Legislature needs to project the expected costs of probable uses and then decide how best to spend and/or invest the windfall.
The debate is not unlike discussions in the private sector when individuals and families inherit large sums. Investment counselors and attorneys usually look at many options and often argue about them before agreeing on an investment and income plan.
Mississippians’ huge and unexpected windfall from the tobacco lawsuit, filed by the state in an attempt to recover costs of treating smoking-related illnesses among indigent patients, requires the same degree of deliberation and examination.
It’s not unreasonable to ask:
– How much will be needed to cover health care costs within the projectable future?
– Will the federal government demand a cut of the settlement to reimburse its expenses paid to Mississippi for sick smokers’ health care?
– Could downturns in interest rates and various financial and stock market investments cripple an “interest only” spending formula?
– Does putting part of the money in a trust and allocating part each year for the general fund (and use on needs other than health care) endanger the settlement’s usefulness?
– What other needs could be met if some of the settlement were annually placed in the general fund?
Legislators act, in this case, as a large investment committee. It’s not likely our state again will receive so large a sum from sources other than taxes, so the right decisions are mandatory.
This year’s budget projections were made without the tobacco settlement factored into spending, so the money that would be derived is not a current budget issue.
The Finance Committee met Thursday afternoon briefly and took no action on the trust fund/general fund proposal. The deadline for action is Tuesday. The topic is important enough to set aside prolonged and, if necessary, special meeting times for its consideration. Even if no decision is reached this session, the substantive questions should be fully posed dispassionately and with the balance required to pass difficult legislation.
The issue has reached the place in the process to deal with its many complexities, and those discussions should be based solely on good financial practice and not any immediate political gratification.
The United States stopped drafting young men and turned to an all-volunteer military with the clear intent to maintain pay and benefits at an effectively attractive level.
The U.S. Senate’s 91-8 vote Wednesday in favor of a 4.8 percent pay raise for the 1.4 million men and women in uniform does more than affirm support; it keeps alive the intent of people who were early advocates of an all-volunteer peacetime force.
The raise exceeds by 0.5 percent the raise recommended by President Clinton. It would cost about $7 billion over the five-year life of the bill, a piddling sum compared to projected surpluses of hundreds of billions. Entitlements consume huge sums and demand investment of some surplus funds, but the military can’t be relegated to secondary budget status. The pay raise is about the quality of life afforded enlistees. It is not a weapons system.
It’s a personnel issue. It involves attracting and retaining the kinds of service men and women including seasoned officers the nation must have.