BATON ROUGE — The declining sales of cigarettes were named as the reason for recent decrease in assets held by the Tobacco Settlement Financing Corporation (TSFC).
A recent financial statement presented to its board noted that total assets had decreased from $145 million to $118 million for the fiscal year 2016-2017.
Tiffani Dorsa, a CPA at Postlethwaite & Netterville presented the information to the Board. She indicated the decline in tobacco sales resulted in a 2 percent decrease in revenues.
A 1999 lawsuit against major tobacco companies resulted in settlement funds being channeled to all states, including $140 million paid annually and in perpetuity. In Louisiana, 60 percent of its share funds bond sales and the rest is held by the state.
State Sen. R.B. “Barrow” Peacock was at the board hearing.
“Any investor can buy the bonds," Peacock said. "They are issued by the tobacco settlement financing corporation. They’re not an obligation of the state of Louisiana. Those people who are buying the bonds are doing their due diligence to look at cigarette usage, and they’ve made the investment decision to buy those based on the thinking there will be enough people smoking to pay the interest and eventually principal payments to retire those bonds. The bonds go through 2023, I believe.”
Peacock told the Louisiana Record that he is concerned the state might sell its share of the funds.
“What concerns me about the decrease in cigarette sales is if Louisiana makes the decision to sell the remaining 40 percent of the tobacco settlement funds and bond them out—basically take our funds today and bond them out," Peacock said. "The state made the decision that instead of getting the proceeds for 100 percent, the state only keeps 40 percent, and 60 percent goes to paying off these bonds. The state hasn’t put all their eggs in one basket. They’ve taken a cautious approach that with some of the proceeds they will sell bonds and take the money off the table. I think the state made the right decision. Of course the proceeds are in there to fund the Taylor Opportunity Program for Students.”