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State To Fill Budget Holes By Borrowing Against Tobacco Fund

Jeff Roberson
Pictured are cartons of cigarettes are on display at a smoke shop in Missouri. Pennsylvania is planning to borrow against the Tobacco Fund, used to fund smoking cessation programs, to finish the 2018 budget.

Pennsylvania is going to borrow against its Tobacco Settlement Fund to fill in last year’s deficit and finish this year’s budget

The Wolf administration confirmed Tuesday that it will tap into the stream of money states have received from tobacco companies since the 1990s.

The borrowing will give the commonwealth money to balance its books up front, and will then be paid back over several decades.

The Commonwealth Financing Authority approved the plan Tuesday. However, Budget Secretary Randy Albright noted that it’s not finalized yet.

“The resolution today simply allows staff at the CFA to put together a professional team, and go out and ascertain in the market what the most cost-effective financing plan should be,” Albright said.

Currently, the Tobacco Fund allocates nearly $16 million annually for smoking cessation programs, according to the American Lung Association.

A spokesman for Wolf said the borrowing won’t affect that money.

But the association’s Deb Brown said she’s still worried.

“Unless they’re going to take money from somewhere else and invest it in these programs at the same level, it has to impact the programs,” she said. “There’s no other way to look at it.”

The administration didn’t elaborate on how it would keep the money flowing.

The tobacco plan was one of two borrowing proposals being considered to fill in budget holes. The other would have securitized profits from the state-run liquor industry.