Virginia has become the latest state to earmark asset securitization as a possible component of its spending plans for the tobacco settlement revenues the state is due.
According to Joshua Lief, the state's deputy secretary for commerce and trade, the Virginia General Assembly has already approved an allocation plan for the state's share.
Dan Shoemaker, policy analyst for Gov. James Gilmore said the current plan is to securitize about $600 million of Virginia's $4.1 billion share of the settlement, with the proceeds earmarked for transportation projects. Some of the priority items being discussed between the governor and his committee on transportation policy include an extension of the Metro line to Dulles Airport in Northern Virginia, the widening of Interstate-80 and a third crossing at the Hampton Bay area.
About 50% of the payments are earmarked for a Tobacco Revitalization Fund, which will have a variety of functions designed to help the state's tobacco farmers and economy overcome the loss of the tobacco crop. Virginia is one the three largest tobacco growing states in the nation and state officials hope this program will help the region reduce its dependence on tobacco.
Another 10% of the state allocation must be spent on education programs to curb smoking, especially among teenagers. The remaining 40% is designated as unallocated and will be earmarked for infrastructure projects. Gilmore has just put forward a plan to use a substantial share of the allocation for transportation projects.
Like other states, Virginia is slated to get its slice of the settlement over the next 25 years. Under a formula adopted by the state General Assembly, approximately $2 billion will be available for tobacco-related projects, while $1.6 billion will be devoted to the governor's transportation program.
Shoemaker said the state's secretaries of transportation and finance and the governor's chief of staff were in New York last week meeting with a number of investment banks but he declined to name them.
Lief said he believed the state had completed all the requirements for achieving "state specific finality," but he was not certain whether the actual signing-off on this had occurred. While Virginia is making progress on different fronts in getting ready for a bond sale, the governor still has to present to the General Assembly an actual spending plan and financing details for its approval. Shoemaker said this will likely take place in January.