Just Like Your Deadbeat Uncle, Poormouthing States Have Money Stashed Away


In the typical red state and many blue ones, budgets are stripped-down skeletons swinging from fiscal trees with skinny, rotting branches and precious few green money leaves. As a consequence, schools do without, teachers, firemen and cops are shown the door and many thousands of other dedicated public employees become publicly unemployed. There’s no money for the poor, Medicaid expansion (even when it’s initially free) or other health care services. Bridges collapse while potholes widen. BOO HOO!!!


A couple of observations here. Strange, isn’t it that when the biggie German car companies float across the pond to backward ‘right to work’ states, the incentive money is ALWAYS there. BMW pays a buck a year to lease their South Carolina land and the local water folks are picking up an $800,000 tab as a favor to another global giant.

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Boeing has gamed the South Carolina incentive system for well over a billion bucks and when the Pro Golfers Association (PGA) was threatened with sponsor loss for the Heritage Classic as Verizon’s money evaporated after the 2010 competition, the state legislature galloped to the rescue. All public utterances poor-mouthing the budget notwithstanding, and with many of the state’s neediest citizens barely scraping by, along comes a pack of millionaires whose singular skill rests in hitting a little dimpled sphere, weighing an ounce-and-a-half or so, with an assortment of engineered sticks with a bulky head affixed to the end. And this bunch wanted $10 million pronto to keep the sponsor-challenged Heritage thing puttering (pardon the pun) along.

It took the state reps and senators little time to shake loose the 10 million to hand over to the PGA. “Why that tournament brings in many millions into struggling Hilton Head Island” they exclaimed. Harbour Town Links is the site of the action. The average island home value is $320,000. It was closer to a half-million before the housing mess. Besides, the PGA promised to pay it back in 5 years (wink, wink, nudge, nudge). The Republican dominated House found the money in a sketchy little insurance reserve fund. At the same time, in another proud move, the legislators voted to cut ALL HIV/AIDS funding, the only state in the union to do so.

The state is blessed that Heritage has now found a sponsor (RBC/Royal Bank of Canada) and the field of young to middle-aged golf pros will continue to spend an April week in luxury with the winner (this year it was Graeme McDowell, an affable Irishman) pocketing $1,044,000 out of the total purse of $5,800,000. The irony is that the big golf names seldom appear given the Heritage date of the week following the Masters.

So mysterious budget anomalies strike again. No money, then a bunch of money for the right person, place or thing. Nobody really knows how much money resides in their state’s secretive coffers. I want to go back over a dozen years to a source of state money nobody thinks about, but is very much a reality. It stems from something called the Tobacco Master Settlement Agreement (MSA). After spending huge money on smoking-related hospital care and follow-up, the states finally decided to go after the companies causing all that physical and financial pain and suffering. Attorneys General set their sights on the 4 Tobacco companies that controlled 97% of cigarette sales at the time: Phillip Morris Inc. R.J. Reynolds, Brown & Williamson and Lorillard.

Four states jumped the gun on an eventual national settlement and brokered their own deals. After a pissing contest with Congress and assorted debated options, 46 states settled on an MSA that included nearly $13 billion out of the gate. Our friends at WIKI calculated the sourced numbers that included yearly payments commencing in April of 2000 for the states involved. A Strategic Contribution Fund of $8.61 billion covered the years 2008-2017. Assorted other contributions approximated $3 billion and change in two ten-year payments, one four-year payment and a one-time payment. There was also an agreement to fund a $1.5 billion anti-smoking campaign.

The total to the states is at least $206 billion over a 25-year period with some payments stretching into perpetuity. That’s a decent chunk of change that is rarely publicized. Of course, it should surprise no thinking human that the big four are trying to screw the states out of money and have held back a percentage of what they owe from 2006-2010. Yes, they were entitled to withhold some bucks as a condition of a lost market share adjustment because Non-Participating Manufacturers (NPM) tobacco companies had captured more business. These amounts, however, are being called into serious question. NPM’s are also obliged to kick in a certain percentage to the states.

Though dating back to 2010, this Website gives a pretty good overview of the issues in question. It’s a complicated brew that includes the MSA, NPM’s, state taxes on cigarettes, elements of state Medicaid programs (the entities that brought the original lawsuits) and other considerations.

Large states like California and New York have received over $100 million for a single year. While contributions are diminishing, there are still enough in each eligible state to cover a percentage of critical expenses in health care and other citizen necessities. Philadelphia’s school workforce suffered initial layoffs of 3,783 personnel (see the August 19/25 issue of The Nation). Another must-see is Governor Tom Corbett’s home page where this public education destroyer has the gall to feature a bandaid “Investing in Education” on the Governor’s Website.

The most cursory of research will uncover endless examples of states (especially red ones) crying wolf over budgetary constraints. Yet, there isn’t a state in the union that can’t access tens of millions of dollars (or more; do tax-free bonds ring a bell?) if one of those giant multinationals demand that the state and/or local goverments pay for everything from its land and infrastructure to tuition for the CEO’s kid and grandma’s bus fare. Otherwise, said global money glutton will locate either in a third-world country, or a Southern third-world right-to-work state.

HuffPost Business recently reported that Exxon Mobile made almost $45 billion in profits in their last fiscal year. Last years revenues for the top 30 global companies exceeded $30 TRILLION. And yet smarmy right-wing politicians excuse these greedy corporate hogs from all but the most benign of taxes. Granted, profits on that 30 trill were reported as a fiscal speck at $1.5 trillion. That means that these companies used every manipulative, bookkeeping (and off the books and two sets of books), off-shore, backroom, tax-evasion, creative write-offs, exaggerated depreciation, screwing with corporate bond numbers and every other accounting trick in the books to phony up their bottom lines. Real profits were most likely 5 to 10 times the reported number.

Remember, Multinational Corporations and corruption are oft-times interchangeable.

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