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Kansas Still Considering Trade of Structured Tobacco Settlement for Cash Now

Kansas officials are still considering trading future payments from a tobacco lawsuit settlement in exchange for an immediate cash payout. (Photo by J. Schafer)
Kansas officials are still considering trading future payments from a tobacco lawsuit settlement in exchange for an immediate cash payout. (Photo by J. Schafer)

Selling bonds to generate a large amount of cash from the state’s tobacco settlement remains a budget balancing option. But there appears to be growing opposition to the idea in the Kansas Legislature. More from Jim McLean, of the KHI News Service.


State budget director Shawn Sullivan says no deal is under discussion. But he says trading years of steady tobacco payments for hundreds of millions in up-front cash remains an option if the state’s budget problems continue to worsen. But opposition to the idea appears to be growing on both sides of the legislative aisle. Senator Laura Kelly, a Topeka Democrat, says cashing in the settlement would jeopardize funding children’s programs. "It’s a dumb idea. I think it borders on fiscal malpractice,” said Kelley. Senator Les Donovan, a Wichita Republican, is more restrained, but he’s also against the idea. "I don’t think it’s a good deal. Frankly you’re going to get less than full value," said Donovan. A lot less. A review of the deals pitched to Kansas officials by the banking giant Citigroup shows that payments to bond holders would come close to doubling the up-front cash generated for the state.

Jim McLean, Executive Editor of KHI News Service, oversees the KHI News Service. From 2005 until 2013, McLean coordinated all communications activities at KHI as Vice President for Public Affairs. The position he now occupies was created as part of a strategic initiative to solidify the editorial and operational independence of the KHI News Service. Prior to coming to KHI, McLean had a distinguished career as a journalist, serving as the news director and Statehouse bureau chief for Kansas Public Radio and a managing editor for the Topeka Capital-Journal. During his more than 20 years in Kansas journalism, McLean won numerous awards for journalistic excellence from the Kansas Press Association, regional chapters of the Society of Professional Journalists and the Kansas Association of Broadcasters. In 1997, McLean and two Capital-Journal colleagues received the Burton W. Marvin News Enterprise Award from the University of Kansas William Allen White School of Journalism for a series of stories on the state’s business climate. McLean holds a bachelor’s degree in political science from Washburn University.