Minnesota sells $757 million in tobacco bonds - Bring Me The News

Minnesota sells $757 million in tobacco bonds

The state plans to repay the bonds through future money from the tobacco settlement. The decision to sell the bonds played a key role in resolving the budget crisis that led to the state's historic government shutdown this summer.
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The state of Minnesota has completed the sale of $757 million in bonds, which it plans to repay through future money from a tobacco lawsuit settlement.

The decision to sell the bonds played a key role in resolving the budget crisis that led to the historic government shutdown this summer. But, as Politics in Minnesota reports, it hasn't been the most popular plan. Some critics worry it could lead to a pattern of borrowing to fill the state's general fund. Others don't feel the state should be tapping into the tobacco settlement money to plug the budget gap.

The Associated Press says paying back bondholders will cost the state about $1.2 billion over the next two decades.

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Minnesota to give up $1B in tobacco bonds to plug budget deficit

The state government will only get about half of that sum by asking for the money now in order to temporarily plug the state's budget deficit. Gov. Mark Dayton and lawmakers voted to borrow against the tobacco money in order to avoid tax increases and additional spending cuts.

Court ruling means lower interest payments on state bonds

Minnesota’s Management and Budget Commissioner Jim Schowalter tells the Pioneer Press a state Supreme Court decision on refinancing bonds "will save Minnesota taxpayers tens of millions of dollars." The justices ruled the state can use future revenue from its 1998 settlement with tobacco companies.

Senators pass $566 million bonding bill

The borrowing plan, approved by a 45-22 vote Monday night, would use $496 million for public works projects, higher education and state Capitol renovations. It also calls to spend an additional $50 million on unnamed Department of Employment and Economic Development projects. House lawmakers approved a similar measure early Monday afternoon. They can either accept the Senate version or the differences will be negotiated in a conference committee.

Dayton unveils his bonding plan

The governor wants to borrow $775 million for a public works program that he says would put more than 20,000 Minnesotans back to work. The money would come from the sale of bonds that the state would pay back, with interest, over 20 years. The pool of money includes $27 million for a new stadium in downtown St. Paul.

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The Minnesota Department of Human Services reports 97.6 percent of retailers checked selling tobacco products are following underage tobacco laws. In order to receive federal funding for prevention and treatment efforts, Minnesota is required to have a least an 80 percent compliance rate. During the 12-month survey, law enforcement agencies issued about 600 citations to store owners.

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