News: CJ Exclusives

Senate Committee Guts Golden LEAF’s 2011 Allotment

Measure would divert $82 million in tobacco settlement funds

The Senate Appropriations/Base Budget Committee passed a bill Wednesday that would divert millions from North Carolina’s tobacco Master Settlement Agreement, including most of Golden LEAF’s allotment for next year, to help plug a looming budget hole.

The bill also would siphon off unencumbered funds from a number of other sources, among them Job Development Investment Grants, the One North Carolina Fund, and the Parks & Recreation Trust Fund.

“Every day that goes by that we don’t either capture these funds or hold back on the spending [is] another dollar spent,” said Sen. Richard Stevens, a Wake County Republican and co-chairman of the committee. “Every dollar that’s saved today, although not completely, begins to help our situation for the next fiscal year.”

The measure would transfer $82 million in unexpended revenues from the three recipients of North Carolina’s tobacco settlement in 1998 — the Golden LEAF Foundation, the Health & Wellness Trust Fund, and the N.C. Tobacco Trust Fund.

Golden LEAF would take the largest hit. It would lose a $67-million annual allotment due April 15. The Health & Wellness Trust Fund would lose $12 million, and the Tobacco Trust Fund $3 million.

The legislation wouldn’t impact Golden LEAF’s future allotments, nor would it touch the group’s corpus valued at $555 million.

For years, Republicans and limited government advocates have criticized Golden LEAF as a political slush fund, but Democrats at the committee hearing defended it as a job-creator.

“The Golden LEAF fund was designed for tobacco-dependent counties, the poorest counties in the state, to put money back in those counties for job creation,” said Sen. Michael Walters, D-Robeson. “We’re taking that assurance that we’ve given those folks away from them again. We’re going to push these poor countries back into recession further than we ever thought we would.”

Democratic Gov. Bev Perdue also criticized the proposed cuts in a statement issued shortly after the committee wrapped up its work for the day.

“I am truly surprised that Senate leadership is considering taking North Carolina’s jobs money as a way to balance the budget,” Perdue said. “It won’t work — and what’s more, our people won’t work if we can’t bring new companies and industries to our state. We have many hundreds of new jobs in the pipeline right now, and they depend on that money. If we don’t win those projects, those jobs go somewhere else. It’s that simple.”

Republican Sen. Don East of Surry County said the budget shortfall necessitates tough choices — and diverting funds from Golden LEAF is one of them.

“I would ask you folks if you don’t agree with this, what group of employees do you plan to lay off?” East said. “Which taxes do you plan to increase? Because we’ve got to balance the budget some way or other.”

The measure now goes to the Senate floor for a vote of the entire body.

David N. Bass is an associate editor of Carolina Journal.

[Editor’s note: This article was updated to report the correct amounts of tobacco settlement money involved.]