Minnesota burns future tobacco cash for budget fix now
By BRIAN BAKST, Associated Press
ST. PAUL, Minn. (AP) -- Minnesota's government is about to give up $1.1 billion in future payments from tobacco companies so it can get about half as much money now for a temporary budget fix.
Late next week, a newly created state authority expects to finalize a sale of bonds leveraging a portion of its 1998 tobacco lawsuit settlement. The sale will free up $640 million to patch a near-term budget hole. But it will deprive the state of a revenue stream, making for future budget headaches.
Democratic Gov. Mark Dayton and the GOP-led Legislature agreed to borrow against the tobacco money to stave off tax increases or additional spending cuts.
The state will face between $65 million and $80 million per year in debt costs.
(Copyright 2011 by The Associated Press. All Rights Reserved