Orange County, Calif., is looking heavily towards the possibility of receiving its share of the national tobacco settlement in one lump sum through the private placement of asset-backed securities.

"Securitization is the best thing to do with that money, irrespective of the initiative," said Charles V. Smith, board of supervisors chairman.

Part of the rationale behind the securitization is to lock in the funds now as opposed to "gambling" on the future survival of tobacco companies. "The tobacco companies are going to find some way out of paying it," added Smith.

As per the existing settlement agreement with tobacco companies are responsible for nearly $900 million in payments to the county over 25 years. A November ballot initiative would require 80% of those funds be earmarked to be spent on healthcare.

Yet a securitization of the settlement could land the county over $350 million immediately, if it is sold to the private bond market.

In the detailed proposal, about half of the lump sum would go towards healthcare while the remainder would be spent on adding beds to jails and retiring bankruptcy debt.

However, those in favor of the original healthcare plan voiced their opposition to the new proposal. "It's still circumventing the democratic process," said Michele Revelle, spokeswoman for the Orange County Medical Association.

Some argued the fact that there exists a health crisis throughout California. "I think [the County supervisors] genuinely think they're doing what's best for the country... but it surprises me that they would consider this," is how one source put it.

Still, supervisors stand by the new plan. One official commented positively on an option in the new proposal, effectively a "poison pill" which would help supervisors maintain control.

A number of East coast states have already ruled in favor of securitization plans similar to Orange County.

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