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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 - PowerPoint PPT Presentation
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MSA Payments and Impacts on Programs
Governor’s Office of Agricultural PolicyJuly 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
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
Kentucky MSA Revenue(in Millions)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 $-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
$160.00
Actual Payments Estimated Payments
Kentucky’s MSA Distribution
MSA Revenue
Ky Ag Development Fund
State Fund
Direct Appropriations
County Fund
118 County accounts
Early Childhood Fund
Healthcare Fund
Kentucky’s MSA DistributionState Fund
Remaining for Regional & State Project Investment
Special Projects
Debt Service
Cost share
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
Kentucky’s MSA Debt Service
Debt Service
Farmland Preservation
2000
Water and Sewer
2000, 2004, 2008
UK Diagnostic Center2008
Breathitt Vet Center2008
4-H Camp Renovations
2008
FFA Leadership Center
Renovations2008
Kentucky’s MSA Debt Service
Debt Service
Farmland Preservation
2000
Water and Sewer
2000, 2004, 2008
UK Diagnostic Center2008
Breathitt Vet Center2008
4-H Camp Renovations
2008
FFA Leadership Center
Renovations2008
$28.4 Million each year to support $379,000,000 in
Bonds
Agricultural Development Fund Appropriations(FY 2001-2014)
FY 2001
FY 2002
FY 2003
FY 2004
FY2005
FY2006
FY2007
FY2008
FY2009
FY2010
FY2011
FY2012
FY2013
FY2014
-
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
30,000,000
35,000,000
40,000,000
45,000,000
County Allocations ConservationState Projects & Admin Debt Service
Agricultural Development Fund Appropriations (FY 2004 vs. FY2014)
DebtService
Conservation
155.5% 72.2%
County Fund
26.2%
State Fund
97.8%
$295,700
$2,500,000
Debt Service KADB State projects & administrationConservation State Cost Share County Ag Development FundsHealthcare Initiatives Early Childhood Development Initiatives
Total: $90.8 Million
Fiscal Year 2014
Recent Tobacco Settlement Actions
D Prevents $42.5 million in Budget Cuts to Tobacco Programs in FY 14
D Ensures that the Enacted Appropriations for FY 15 & 16 will be fully funded (Agriculture the biggest beneficiary)
D Provides an Estimated $57.9 million in Additional Tobacco Funds over the 3 Fiscal Years
D Provides an Estimated $42.0 million in Additional Tobacco Funds over 2 Fiscal Years (FY 14 and 15)
D Removes the biggest element of uncertainty to Tobacco Fund receipts over the next 10 years
D Saves the costly annual expense of litigation/arbitration
Prevents Budget Cuts to Tobacco Programs in FY 14
D Enacted Appropriations $90,800,000
D CFG Revised Estimate (Dec 2013) $45,400,000
D Budget Reduction Plan to Cut $45.4 million enacted in HB 235 to be prepared if the CFG Revised Estimate came true
• Agricultural Development Fund ($23,124,200)• Early Childhood Development Fund ($
6,261,300)• Health Care Improvement Fund ($15,985,800)
FY 2014 Budget Reduction Plan-Agricultural Development – Cuts that Won’t Take Place
Planned Budget Cuts in Reduction Plan:
*Includes Shifting $5.7 million in GOAP Grant Funds Just to Pay Debt Service and $6 million to County AccountsWithout the Settlement: County Accounts would only have$6,000,000 and the statewide Agricultural Development grant program would be bare-bones
Agricultural DevelopmentCounty Accounts ($8,083,600
)Gov’s Office for Agricultural Policy Grants* (12,046,700
)Conservation/Cost Share Program (2,938,600
)Agricultural Development Total ($23,124,200
)
Tobacco Fund Revenue Estimates in the 2014-16 Enacted Budget
• Two-Year Difference: FY 14 & 15• Three-Year Difference: FY14,15 & 16
$42.0$57.9
Fiscal Year FY14 FY15 FY16
• Enacted $90.8 $99.7 $72.4
• Estimate with Settlement $159.4 $73.1 $88.3
• Difference $68.6
($26.6) $15.9
Ensures that the Enacted Appropriations for FY 15 and 16 will be fully funded
D Extra Funds received in FY 14 will be used to offset the estimated shortfall in FY 15 Tobacco Receipts
D FY 14 Receipts in Excess of Appropriations = $68.6 million
D Expected FY 15 Shortfall = $26.6 million
D The remaining $42.0 million from the FY 14 receipts will be reserved until the General Assembly takes future actions
Tobacco Settlement Appropriations for FY 15 and FY 16
FY 2015 FY 2016(millions $)
$72.40Official Revenue Estimate $99.70
Agricultural Development $37.70 $12.82
less State Enforcement (Revenue Dept) 0.25 0.25less Debt Service 28.39 28.48
$71.06 $43.67
County Accounts 19.35 9.85Gov’s Office for Agricultural Policy Grants 11.75 2.37Conservation/Cost Share Program 6.00 0.00Farms to Food Banks 0.60 0.60
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
404 Ann StreetFrankfort, KY 40601
(502) 564-4627agpolicy.ky.gov
Governor’s Office of Agricultural PolicyRoger ThomasExecutive Director
Visit our Flickr site for recent event photos: www.flickr.com/photos/agpolicy.
Joel NeaveillChief of Staff