How Are Tobacco Funds Distributed?

The Tobacco Commission allocating money for everything. I thought the tobacco money was for the farmers. Could you please explain this for me?
Linda Baker
Bristol, Va.

Virginia tobacco farmers have gotten $237 million from the Virginia Tobacco Indemnification and Community Revitalization Commission since 2002.

Part of that amount is $20.6 million recently allocated in 44,000 checks, said Tim Pfohl, director of the Commission’s grant program.

He said part of the Tobacco Commission’s charge is to pay farmers for the quota system, which controls the amount of tobacco the farmers are allowed to grow and sell under the federal government’s supply control system. It is also to help repay farmers for their investment in equipment specific to growing tobacco.

The payments are called indemnities.

Another mission of the Commission is to help tobacco farmers by also helping the entire community, which is the economic development prong. Within that branch is an education component which provides scholarships, funds educational programs, job training initiatives, agribusiness development and special projects, which aims to spread some money to the thinkers whose innovative programs can be used as models that could potentially reshape the economies of communities across the tobacco region.

Technology is another prong of the Commission’s purpose. It gives money to projects that bring affordable open access, high-speed connectivity to economic development sites in the tobacco region.

The initiative is lacing the region with fiber-optic cable, an infrastructure for high-tech businesses. Mix in some tax and financial incentives covered by the grants and local governments that help lure white-collar businesses, to which other tobacco money is providing world-wide connectivity.

And potential for the region’s Internet connection goes far beyond keeping kids busy with video games. B.A. Farmer can now track sales of the organic vegetables he grows where tobacco was once cultivated, and grant money helps provide a market for Mr. Farmer to sell his unique produce. Local grown is becoming the trendy buzzword across the region and the nation for that matter. The efforts are solidly linked to previous growing of tobacco in parts of the commonwealth.

In addition to tasting better and likely being safer, locally grown food products don’t have to be shipped so far to reach consumers, thereby conserving fuel in theory.

With skyrocketing fuel and energy costs, the Commission just days ago approved more than $36.6 million for six energy research projects, including one in
Abingdon and another in Wise. It was the bulk of more than $45 million in checks Tobacco Commission staff will be sending out soon to addresses across the region for more than 35 economic development and community improvement projects. 

OK, here’s the background.

The 31-member Virginia Tobacco Indemnification and Community Revitalization Commission was established by the General Assembly in 1999. It is responsible for spending half of the state’s $4 billion share of a 1998 multistate tobacco Master Settlement Agreement by providing payments to farmers and funding development projects in the economically stressed tobacco-growing regions of Southwest and Southside Virginia.

The state’s share, to be paid out over 25 years, is part of the $206 billion the country’s big tobacco companies agreed to pay to settle a lawsuit filed by a number of states that sued to recoup the costs of treating sick tobacco users.

Pfohl said the settlement money is split 10 percent focused on smoking prevention and 40 percent to the general fund as the health care reimbursement. The Tobacco Commission receives the other half, which it doles out in grants to programs and projects like money for job-producing industrial development, tourism, the Arts and much more. 

According to its Web site, the Commission so far has approved more than 970 grants for more than $432.5 million.

In March, 2004, the state initiated a $767 million bond sale, backed by the tobacco-settlement dollars, that was intended to raise money to create a $680 million endowment for the commission to continue its work.

The bond sale was canceled in the wake of a $10.1 billion verdict against cigarette maker Philip Morris USA in an Illinois class-action smokers’ lawsuit. However, the Tobacco Commission has since established the endowment.

So far, it seems members of the Tobacco Commission and those who administer its wishes are doing what the General Assembly intended.

MARK HICKS is assistant city editor at the Bristol Herald Courier and can be reached at (276) 645-2546 or by e-mail at . Questions can be mailed to Question Mark, Bristol Herald Courier, P.O. Box 609, Bristol, VA 24203.