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MSA Payments and Impacts on Programs

MSA Payments and Impacts on Programs. Governor’s Office of Agricultural Policy July 16, 2014. Tobacco Master Settlement Agreement (MSA). 1998 agreement between 46 states Attorneys General that compensated states for the costs associated with the treatment of smoking-related illnesses

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MSA Payments and Impacts on Programs

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  1. MSA Payments and Impacts on Programs Governor’s Office of Agricultural Policy July 16, 2014

  2. Tobacco Master Settlement Agreement (MSA) 1998 agreement between 46 states Attorneys General that compensated states for the costs associated with the treatment of smoking-related illnesses Written for the first 25 years, but agreement is in perpetuity States were left to decided how they wanted to allocate this new source of revenue

  3. Kentucky MSA Revenue(in Millions)

  4. Kentucky’s MSA Distribution

  5. Kentucky’s MSA Distribution

  6. What is Debt Service? Bonds issued backed by full faith and credit of the Commonwealth Cash now for projects in exchange for repayment of debt over time Debt Service - Cash needed to pay interest and principal on a loan / debt

  7. Kentucky’s MSA Debt Service

  8. Kentucky’s MSA Debt Service • UK Diagnostic Center • 2008 • Breathitt Vet Center • 2008 • Water and Sewer • 2000, 2004, 2008 • 4-H Camp Renovations • 2008 $28.4 Million each year to support $379,000,000 in Bonds • Farmland Preservation • 2000 • FFA Leadership Center Renovations • 2008 • Debt Service

  9. Agricultural Development Fund Appropriations(FY 2001-2014)

  10. Agricultural Development Fund Appropriations (FY 2004 vs. FY2014) 155.5% 97.8% 26.2% 72.2% Debt Service County Fund State Fund Conservation

  11. Fiscal Year 2014

  12. RecentTobaccoSettlementActions D Prevents$42.5 million in Budget CutstoTobaccoProgramsin FY 14 D Ensures that theEnacted Appropriationsfor FY15 &16willbe fully funded(Agriculturethe biggest beneficiary) D Providesan Estimated $57.9million in Additional Tobacco Fundsoverthe 3 Fiscal Years D Providesan Estimated $42.0million in Additional Tobacco Fundsover2 Fiscal Years(FY14 and15) D Removesthe biggest elementof uncertaintyto Tobacco Fund receiptsoverthe next10 years D Savesthecostlyannualexpense oflitigation/arbitration

  13. PreventsBudgetCuts toTobaccoPrograms inFY14 D EnactedAppropriations $90,800,000 D CFGRevisedEstimate(Dec2013) $45,400,000 D BudgetReductionPlantoCut$45.4millionenactedin HB235to bepreparedif theCFGRevisedEstimatecametrue

  14. FY2014BudgetReductionPlan-Agricultural Development–Cuts thatWon’tTakePlace PlannedBudgetCutsinReductionPlan: *IncludesShifting$5.7millioninGOAPGrantFundsJusttoPay DebtServiceand$6milliontoCountyAccounts WithouttheSettlement:CountyAccountswouldonlyhave $6,000,000andthestatewideAgriculturalDevelopmentgrant programwouldbebare-bones

  15. TobaccoFundRevenueEstimates in the 2014-16EnactedBudget • Two-YearDifference:FY14& 15 • Three-YearDifference:FY14,15&16 $42.0 $57.9

  16. EnsuresthattheEnactedAppropriationsfor FY15and16willbe fully funded D ExtraFundsreceivedin FY14willbeusedtooffsetthe estimatedshortfallin FY15 TobaccoReceipts D FY14Receiptsin ExcessofAppropriations=$68.6million D ExpectedFY15Shortfall=$26.6million D Theremaining$42.0millionfromtheFY14receiptswillbe reserveduntiltheGeneralAssemblytakesfutureactions

  17. TobaccoSettlement Appropriationsfor FY15 andFY16 FY2015 FY2016 (millions$) $72.40 OfficialRevenue Estimate $99.70 Agricultural Development $37.70 $12.82

  18. Other GOAP Reminders • County Council Membership • August 1, 2014 – deadline • 44 Counties to date • County Council Administrative Funds • Due to delayed 2014 payment, this process has been delayed

  19. Governor’s Office of Agricultural Policy Roger ThomasExecutive Director Joel NeaveillChief of Staff 404 Ann StreetFrankfort, KY 40601(502) 564-4627agpolicy.ky.govgovkyapolicy@ky.gov Visit our Flickr site for recent event photos: www.flickr.com/photos/agpolicy.

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