All Posts Tagged With: "Smoking"

Casinos, Bonds, and Cigarettes

Iowa Politics - Cigarette and DieBack in 2001, Iowa decided to securitize its portion of the multi-state tobacco lawsuit settlement. “Securitize” means to borrow against it. They issued almost $700 million in bonds through the Iowa Tobacco Settlement Authority, with the settlement money itself as the asset backing the bonds. Most of them are even tax-exempt.

Such is the nature of public finance; the settlement was a windfall of revenue that didn’t have to be taxed from the citizens, but instead of just riding the wave, the government used it as collateral to borrow money. Never put off spending that can be done today.

More than seventy percent of the money Iowa receives from the tobacco settlement goes to debt service on those bonds – these, like most government bonds, …

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