04.09.00

By Elana Simms

Tobacco farmers can breathe a sigh of relief: Virginia’s share of the national tobacco settlement money won’t be diverted to road projects in the north and southeast regions of the state.

With the end of the General Assembly’s 2000 session, legislators who originally sought the money for the state’s transportation improvements have decided to tap a different fund, reserving the settlement primarily to aid tobacco farmers and their communities.

"Tobacco farmers and supporters can rest a little easier now knowing that the money is going to be spent with their best interests mind," said Sen. Phillip P. Puckett, D-Lebanon.

The push by legislators to improve Virginia’s highway, air and rail systems will be funded through more than $1 billion dollars in bonds, backed by the state’s $600-million-a-year stipend in federal highway funds. Lawmakers also plan to use taxes paid by fuel dealers as a source of revenue for transportation improvements.

Under the settlement negotiated between 46 states and tobacco companies, Virginia is expected to receive $4 billion over the next 25 years.

The state has earmarked 50 percent of that money to tobacco growers. Ten percent has been allocated to medical research and educational programs aimed at curbing youth smoking. The remaining 40 percent is being distributed at the General Assembly’s discretion.

A legislative debate emerged over how to use that 40 percent. Instead of transportation needs, lawmakers agreed to spend the funds on health-related programs.

Puckett said he agrees with that decision.

"There was a really significant interest in using the 40 percent for health programs rather than the roads," said Puckett, a member of the Senate Agricultural, Conservation and Natural Resources Committee.

"Both sides of aisle wanted to see the tobacco money put in health care instead of the highway system. Health has an overriding importance to most people."

Before adjourning March 10, the General Assembly passed the Senate-approved $2.1 billion transportation improvement plan, overriding a pricier $2.6 billion plan proposed by Gov. Jim Gilmore.

Sen. John Chichester, R-Fredericksburg, said the revised plan does not permanently fix Virginia’s transportation problems.

Senate Minority Leader Richard Saslaw, D-Springfield, agreed, but added, "Under the parameters we can work with, it’s probably the best we can do."

Legislators from traffic-congested Northern Virginia lobbied in vain for more state money for roads.

Senator Warren E. Barry, R-Fairfax, along with Saslaw, a Democrat, tried to get about $1 billion dollars more for transportation needs.

"Give the same consideration," Barry argued, "to the transportation problems of Northern Virginia, as you are to the textile problems of Martinsville, the coal problems of Southwest Virginia and the tobacco problems of Southside."

But in the end, legislators agreed to borrow money – instead of using the tobacco settlement – to build more roads in the state’s most populous areas.

The focus now shifts to helping tobacco farmers in a declining market.

Farmers are hurting because tobacco companies have reduced how much tobacco they guarantee they will buy – an amount known as the tobacco quota.

The quota for burley leaf tobacco, grown mostly in Southwest Virginia, has fallen 70 percent over the past three years, Puckett said.

He said his first priority is to compensate tobacco growers for such losses. "I don’t think the general public realizes what that means to a farmer who might have had $10,000 in tobacco income coming in and now he’s looking at $3,000."

Virginia’s tobacco settlement package has been crafted into two parts:

• Phase one is the 50-40-10 percent allocation of Virginia’s share of the national settlement.

• Phase two is a separate fund, set up to directly indemnify tobacco farmers for their loss in quota.

The state has established the Tobacco Indemnification and Community Revitalization Commission to distribute the money to farmers. Puckett is a member of that commission.

Before June 1, according to Puckett, the commission plans to send farmers a third round of checks from the phase-two fund. So far, $21.6 million has been distributed to farmers.

Puckett also said the commission has its eye on the future. The panel anticipates using some of the money set aside for farmers for community development, he said.

"We do recognize that down the road there will be opportunities to use some of that money for community revitalization as we move from a tobacco economy to whatever new opportunity we have," he said.

Puckett said the commission plans to utilize planning commissions across Virginia to learn how to implement community revitalization.

Sen. Charles Hawkins, R-Chatham, who was unavailable for comment, heads the commission that will decide what to do with the tobacco farmers’ 50 percent.

Craig Reynolds, executive director of the Galax-Carroll-Grayson Chamber of Commerce, said community development in rural Virginia will be a challenge.

"There is a lot of work that needs to be done in positioning these localities to truly be able to draw economic development."