tocacco plant Native American Tobaccoo flower, leaves, and buds

tocacco Tobacco is an annual or bi-annual growing 1-3 meters tall with large sticky leaves that contain nicotine. Native to the Americas, tobacco has a long history of use as a shamanic inebriant and stimulant. It is extremely popular and well-known for its addictive potential.

tocacco nicotina Nicotiana tabacum

tocacco Nicotiana rustica leaves. Nicotiana rustica leaves have a nicotine content as high as 9%, whereas Nicotiana tabacum (common tobacco) leaves contain about 1 to 3%

tocacco cigar A cigar is a tightly rolled bundle of dried and fermented tobacco which is ignited so that its smoke may be drawn into the mouth. Cigar tobacco is grown in significant quantities in Brazil, Cameroon, Cuba, Dominican Republic, Honduras, Indonesia, Mexico, Nicaragua, Sumatra, Philippines, and the Eastern United States.

tocacco Tobacco is an agricultural product processed from the fresh leaves of plants in the genus Nicotiana. It can be consumed, used as an organic pesticide, and in the form of nicotine tartrate it is used in some medicines. In consumption it may be in the form of cigarettes smoking, snuffing, chewing, dipping tobacco, or snus.

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Michigan’s burning question about tobacco settlement money

The story of Pittsburgh’s recovery and what policymakers in Detroit and Lansing can do to emulate it was the subject of a key panel at the recent Mackinac Policy Conference.

One thing, say critics of policy here, is to quit eating the state’s seed corn. They say the state should spend the $75 million a year in tobacco settlement money as was originally promised: on the 21st Century Jobs Fund and job diversification, instead of using it to plug gaps in the general fund.

John Manzetti, president and CEO of the Pittsburgh Life Sciences Greenhouse, a tech incubator and support-services organization, told the Mackinac panel that one main reason for Pittsburgh’s revitalization is that Pennsylvania policymakers pledged to put their entire tobacco settlement into life sciences and health care-related issues, and they have stayed true to that promise.

“Pennsylvania was the only state that committed to putting 100 percent of its money into health care-related activities,” Manzetti told Crain’s.

Michigan’s $1 billion 21st Century Jobs Fund program was a product of negotiation between lawmakers and Gov. Jennifer Granholm, who first proposed it in her 2005 State of the State address. It has been a central state effort to invest in emerging sectors and business growth and diversify the economy, targeting the sectors of life sciences, advanced manufacturing, homeland security and defense and alternative energy.

Created in late 2005 and capitalized in part by selling a portion of the revenue stream Michigan receives from a national settlement with tobacco companies, the program included $400 million for projects and allocation over two years by the board of the Michigan Strategic Fund, and an additional $75 million annually over eight years.

The state sold bonds to obtain the $400 million in cash and is using yearly allocations from tobacco settlement receipts for the $75 million annually, according to the Michigan Department of Treasury. The money began flowing to Michigan in 1999.

A rocky start

Commitments to the Jobs Fund were reduced from the start. It was supposed to get the original appropriation of $400 million but instead had $393 million after $6 million in vetoes and $1 million to close the state’s 2006 books. The pot was then further cut into for budget and book-closing purposes by nearly $55 million, leaving about $338 million.

That $338 million has helped fund the $109 million 21st Century Investment Fund and other programs, which have included a more than $100 million high-profile commercialization competition in 2006, $15.5 million toward retraining laid-off Pfizer Inc. employees and aiding new companies they start up, a $10 million defense contract coordination center, an $8 million pre-seed fund, a $3.5 million small-business financing initiative and a host of smaller projects like a life sciences pipeline and automotive business accelerator.

The Jobs Fund’s annual revenue stream has been put to uses that include $64 million for the Centers of Energy Excellence grant program aimed at drawing alternative energy technology development, $23.3 million for an auto supplier diversification loan program, and $9 million for a fund to help the state close economic development deals.

There was also $30 million for a second commercialization competition in 2008.

But that competition, which made awards for projects in life sciences, alternative energy, advanced automotive materials and manufacturing, and homeland security and defense, was scratched in 2009 because the state lacked the minimum $25 million to hold it.

When the $75 million annual revenue stream started up in fiscal 2008, there was full funding toward the program’s job-creation purposes plus an additional $50 million appropriation for tourism and business promotion, for a total of $125 million.

But in 2009, the Jobs Fund got just $52.9 million, with $22 million being diverted to the budget gap, according to the administration.

In the current fiscal year, the Jobs Fund got just $28.5 million.

In upcoming fiscal 2011, the state Senate has proposed reducing the contribution further to provide $26.5 million. That compares with $75 million proposed by the governor and nearly $73 million proposed by the House, an amount that is expected to be reduced during reconciliation talks with the Senate to approve the budget.

“The distinguishing characteristic of what they’ve done in Pittsburgh is a commitment to stay the course, a commitment to build an effective program,” said Greg Main, president and CEO of the Michigan Economic Development Corp.

“We’ve been watching this unfold the last number of years, and it’s very frustrating. We’re mortgaging our economic future,” said Stephen Rapundalo, president of Ann Arbor-based MichBio, a biosciences trade organization.

Rapundalo said as a city council member in Ann Arbor, he has perspective on the difficulties facing state legislators, but you’re either committed or you’re not.”

But policymakers say holding on to your seed corn won’t do you any good if you die of starvation this year.

Senate Majority Leader Mike Bishop, R-Rochester, said that “a legislator is just like a businessperson. … We look at return on investment. And legislators are not seeing the kind of return on investment that we had hoped for out of our 21st Century Jobs Fund program.”

Bishop pointed to a decade of Michigan job loss — according to the Senate Fiscal Agency, Michigan has lost some 854,100 wage and salary jobs since June 2000 - and said, “something’s not working. And at some point in time, we as Michiganders have to agree that what we’re doing now has to be re-thought.”

Jeff Mason, executive director of the Lansing-based UniversityResearch Corridor, counters: “I was struck with the Pittsburgh presentation when the first speaker said that this is a 30-year journey. I always tell people it’s a marathon, not a sprint.”

Mason pointed out the Third Frontier program in Ohio as an example of a tech-commercialization program that has had consistent bipartisan support. It was founded in 2002 with a commitment of $1.2 billion over 10 years, and in May, voters overwhelmingly approved further funding of $700 million.

Liz Boyd, press secretary to Granholm, said that “the bulk of the (Jobs Fund) money has been used for job-creation activities” although some diversions have been necessary. “Obviously, we’ve had to make some very tough choices.”

Boyd added that the Jobs Fund is one part of a multifaceted state economic development strategy that has been built up to include initiatives like tax credits for the advanced battery and photovoltaic industry sectors.

House Speaker Andy Dillon, D-Redford Township, who had the idea to capitalize the fund by selling a portion of the tobacco settlement money, like other policymakers, has also agreed to some of the diversions. Dillon said lawmakers continually face competing priorities.

“Are we going to fund education, or police and fire? … It’s an ongoing battle,” he said.

For example, there’s been the thought of using some of the fiscal 2011 money for the Michigan Department of Transportation so Michigan would have the $84 million in state funds it needs to draw $475 million in federal highway funds.

Dillon said it’s not his preference to use Jobs Fund money that way, but there is “a lot of job creation” by procuring the federal funding instead of leaving it on the table in Washington.

And every group of legislators needs to be able to decide how appropriations are spent.

“One Legislature can’t bind another,” he said.

By Amy Lane and Tom Henderson
Crainsdetroit, Jun. 13, 2010

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