• More Accountability Urged For Tobacco Commission Spending
  • A commission created to revitalize Virginia's economically depressed cigarettes counties needs to spend more money on regional initiatives with measurable benefits and less on small projects tailored to local interests, a legislative watchdog agency recommended today.

    A study by the Joint Legislative Audit and Review Commisssion found that Tobacco Indemnification and Community Revitalization Commission has done a good job of investing tobacco settlement funds in broadband technology, economic projects identified by the state, and educational opportunities in Southside and Southwest Virginia. But it said the panel is too big and doesn't meet often enough to give proposed projects the scrutiny they deserve.

    It cited lack of measurable results for 89 percent of the $756 million of settlement funds spent since 2000, while noting that it is too soon to judge projects that have received $372 million of those funds in the last three years.

    "The Tobacco Commission has had a significant positive impact on Virginia's tobacco region, but has also funded projects that have not contributed to regional revitalization," study leader Walt Smiley told the legislative commission at a meeting today in Richmond.

    Smiley said the 12-year-old commission has greatly improved its requirements for ensuring tobacco funds are properly spent since a $5 million grant made to a former state finance secretary who was convicted last year of defrauding the panel of $4 million from the 2001 grant. John W. Forbes is serving a 10-year sentence in prison for the fraud, committed while he served as finance secretary for Gov. Jim Gilmore.

    While the study found no evidence of other attempts to steal money from the tobacco commission, Smiley said, "Someone who is intent on committing fraud with the money could probably do so."

    JLARC's findings echoed many of the conclusions reached three years ago by a blue-ribbon panel led by former Gov. Gerald L. Baliles. The Tobacco Commission carried out eight of the panel's 22 recommendations. The others it tabled or rejected, including a recommendation for a study by JLARC. The study released today was ordered through an amendment to the state budget last year.

    The study specifically recommended that the commission eliminate a funding formula for grants to localities in Southside that allocated money based on tobacco production in 1998 because it funnels too much money to four localities that need help less than others in the region that get nothing. The Southside grant program is one of several operated by the commission for 41 localities in two tobacco-growing regions. Money to localities in Southwest Virginia is not subject to the formula.

    It also recommended that the commission use more of its money to hire administrative staff to provide closer inspection of projects granted tobacco funds, reduce the size of the 31-member panel and increase the frequency of its meetings, and do a better job of setting priorities to ensure the money is spent on projects with potentially big regional payoffs instead of those approved under political pressure from local constituents.

    While the commission's staff does a good job of reviewing projects proposed in advance, Smiley said, some projects are acted on with "no economic impact analysis in hand" and others "roll in at the last minute."

    Sen. R. Edward Houck, D-Spotsylvania, said it is "not acceptable" that the commission has made grants to projects that the JLARC study had "limited potential" for broad economic benefits to the region.

    Tobacco commission officials said they generally agreed with the report, but Executive Director Neal E. Noyes disputed the suggestion that last-minute proposals are approved by the panel without thorough review. "It simply doesn't happen," Noyes said after today's meeting.

    Del. Terry G. Kilgore, R-Scott, the commission's chairman and an original member of the panel, said the full commission will consider the recommendations at a meeting on Sept. 21. Some it will be able to implement, but others would require legislative action, he said.

    This year, the General Assembly rejected a proposal to prohibit members of the legislature from serving on the commission. The JLARC report does not make that recommendation, but it does suggest that members of the commission and its staff have more background in economic development, banking, and education.

    Like the Baliles report, the study recommends that the Secretary of Education be a member of the panel, as the law requires for the secretaries of finance, commerce and trade, and agriculture.

    "It's a big commission," Kilgore said after today's meeting. "It's a big area, too."