BATON ROUGE, LA – State Treasurer John Kennedy said the state’s anticipated annual tobacco payments could be jeopardized by today’s Florida jury decision that ordered the tobacco industry to pay more than $140 billion in damages to sick Florida smokers.

For some time Ive recommended that the state sell all or a portion of its $4.4 billion tobacco settlement income stream to minimize the risks of big tobacco going broke. Today’s decision only reinforces my resolve in this matter, said Kennedy.

Today’s judgment is the largest jury damage award ever. The largest previous punitive-damage award was $5 billion against Exxon Mobil for the Exxon Valdez oil spill in Alaska. Considering the magnitude of the judgment, the case is expected to be appealed and could take years to come to completion.

For several years now, the tobacco industry has been under fire from state governments, the federal government and private plaintiffs. Even foreign governments are starting to sue the tobacco companies. By waiting to sell all or a portion of our settlement, were gambling on big tobaccos future, said Kennedy.

The fiscally responsible thing to do is to begin taking steps today to put into place the mechanism to hedge our bets and lessen our risks by selling all or a portion of the state’s income stream, as I have said now for well over a year, he said.

I pose this question: Knowing what you know now, if your rich uncle died and left you $4.4 billion, all invested in Phillip Morris stock, wouldn’t you diversity by selling at least a portion of that stock? In my opinion, the state’s response should be no different, Kennedy added.

The state’s portion of the national $246 billion tobacco settlement was originally projected to be $4.6 billion, which would be paid to the state in annual payments of approximately $180 million over 25 years. The state legislature allocated the state’s first annual payment to balance the 1999-2000 budget, and the remaining $4.4 billion in payments were constitutionally dedicated. They are divided between the Louisiana Fund and the Millennium Trust, which is specifically dedicated to support health and education initiatives and the TOPS scholarship program.

Contact:
Delia Taylor, Communications Director
(225) 342-0010