LANSING ? Gov. Jennifer Granholm said Wednesday that she supports selling part of the state’s share of the national tobacco settlement in exchange for a lump-sum payment that would be invested to lure cutting-edge businesses to Michigan, which could prompt the governor to drop her proposal to invest $2 billion for the same purpose by selling voter-approved bonds.
Granholm’s apparently blessed a proposal, developed in the House by Rep. Andy Dillon (D-Redford) and Rep. Bill Huizenga (R-Zeeland), which would sell the rights to one-quarter of the state’s annual revenues from the tobacco settlement in exchange for a $1 billion upfront, lump-sum payment. The state this year expects to receive about $287 million in tobacco settlement revenue and is scheduled to continue receiving payments in perpetuity or as long as the tobacco companies exist. The state would then invest the $1 billion in venture capital, commercial loans and equity investments.
Granholm told Michigan Public Radio at an event in Plymouth Township that she could support selling part of the tobacco settlement, a procedure known as securitization, to invest the money in the economy.
“It is a response to an immediate crisis,” the governor told MPR. “Securitizing those tobacco settlement dollars for this large, one-time investment in the economy is an effective way of jump-starting the restructuring of our state’s economy.”
Whether the funds are generated through securitization or through a bond sale is less important than having the funds to help the economy, Granholm said.
“The bottom line is we need to create a fund that will enable us to invest in early-stage businesses, businesses that have a great idea,” she said.
There was additional activity Wednesday on the securitization front as House Republicans prepared to announce tapping the tobacco settlement funds for another $2 billion that would be directed to the Merit Award scholarship and the Medicaid Benefits Trust Fund.
Of Granholm’s remarks, House Speaker Craig DeRoche (R-Novi) said, “I think that that’s encouraging and gives me hope that we’ll be able to work through this and the remaining items.”
DeRoche would not say if the two sides have struck an agreement on how to invest in the economy, but called the House proposal a “solid” one that would avoid incurring the long-term debt of Granholm’s plan. DeRoche said the House could vote on the plan as soon as Thursday.
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