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2005 House Bill 5048: “Securitize” tobacco lawsuit settlement revenue

Public Act 226 of 2005

  1. Introduced by Rep. Bill Huizenga (R) on July 6, 2005, to “securitize” or sell three-quarters of the revenue stream from the 1998 tobacco company lawsuit settlement, the entire amount of which is approximately $280 million per year. Selling the entire revenue stream for 20 years would reportedly generate a lump sum of approximately $4 billion. Among other things, money from the sale would be used to pay for the grants, loans and subsidies programs proposed by either House Bill 5006 or House Bill 5047.
    • Referred to the House Commerce Committee on July 6, 2005.
      • Reported in the House on July 13, 2005, with the recommendation that the substitute (H-1) be adopted and that the bill then pass.
    • Substitute offered in the House on August 31, 2005, to replace the previous version of the bill with one that revises many details of the revenue sources, governance, and allocation of the proposed subsidies, but does not change the thrust of the bill as previously described. The substitute passed by voice vote in the House on August 31, 2005.
    • Amendment offered by Rep. Bill Huizenga (R) on August 31, 2005, to tie-bar the bill to a package of related subsidy bills and business tax cut bills, meaning this bill cannot become law unless those ones do also. Specifically, these are House Bills 4972, 4973, 5047, 5108, and 5109, and Senate Bills 359 and 533. The amendment passed by voice vote in the House on August 31, 2005.
    • Substitute offered by Rep. Andy Dillon (D) and Rep. Bill Huizenga (R) on September 28, 2005, to replace the previous version of the bill with one that reflects negotiations involving House Bill 5047, which would require the "securitization" of approximtely one-third of the tobacco settlement revenu. The substitute passed by voice vote in the House on September 28, 2005.
    • Amendment offered by Rep. Leslie Mortimer (R) on September 28, 2005, to require that one of the three financial institutions or brokerages that the bill requires be used to handle the securitization process to be based in Michigan. The amendment passed by voice vote in the House on September 28, 2005.
  2. Passed 103 to 1 in the House on September 28, 2005, to establish a state board to “securitize” or sell approximately one-third of the revenue stream from the 1998 tobacco company lawsuit settlement, the entire amount of which is approximately $280 million per year, and create regulations for this. This will reportedly generate a lump sum of $1 billion, which will be used to pay for the grants, loans and business subsidy programs proposed by House Bill 5047.
    Who Voted "Yes" and Who Voted "No"

  3. Received in the Senate on September 29, 2005.
    • Referred to the Senate Government Operations and Reform Committee on September 29, 2005.
      • Reported in the Senate on October 18, 2005, with the recommendation that the substitute (S-1) be adopted and that the bill then pass.
    • Substitute offered in the Senate on October 18, 2005, to replace the previous version of the bill with one that does not require that the business tax cuts passed by the House in House Bill 5108 go into effect for this and related business subsidy bills to go into effect. The substitute passed by voice vote in the Senate on October 18, 2005.
    • Amendment offered by Sen. Valde Garcia (R) on October 19, 2005, to not give the independent public financial advisor authorized by the bill oversight authority over the state budget director, but only over the Michigan tobacco settlement finance authority created by the bill. The amendment passed by voice vote in the Senate on October 19, 2005.
  4. Passed 34 to 4 in the Senate on October 19, 2005, to establish a state board to “securitize” or sell approximately one-third of the revenue stream from the 1998 tobacco company lawsuit settlement, the entire amount of which is approximately $280 million per year, and create regulations for this. This will reportedly generate a lump sum of $1 billion, which will be used to pay for the grants, loans and business subsidy programs proposed by House Bill 5047.
    Who Voted "Yes" and Who Voted "No"

  5. Received in the House on October 19, 2005.
    • Substitute offered by Rep. Bill Huizenga (R) on November 10, 2005, to adopt a version of the bill that reflects the agreement struck between Gov. Jennifer Granholm and Republican legislative leaders to adopt a modest business tax cut and a scaled-down "21st Century Jobs Fund." The latter would be given $400 million of "securitized" tobacco settlement revenue right away, and $75 million per year for eight years from the remaining “unsecuritized” settlement revenue stream. Future legislatures would not be bound by the $75 million per year agreement, however. The substitute passed by voice vote in the House on November 10, 2005.
    • Amendment offered by Rep. David Farhat (R) on November 10, 2005, to make more explicit the definition of a Michigan financial institution in the provision that requires a portion of the securitization process go through Michigan companies. The latest version specifies at least two financial institutions, one of which must have facilities in Michigan. The amendment passed by voice vote in the House on November 10, 2005.
  6. Passed 98 to 7 in the House on November 10, 2005, to "securitize" tobacco settlement revenue as part of an agreement struck between Gov. Jennifer Granholm and Republican legislative leaders to adopt modest business tax cuts and a scaled-down "21st Century Jobs Fund." The latter would be given $400 million of "securitized" tobacco settlement revenue right away, and $75 million per year for eight years from the remaining “unsecuritized” settlement revenue stream. Future legislatures would not be bound by the $75 million per year agreement, however. The tax cut is described under the final votes on Senate Bill 633, and details of the full package by a Senate Fiscal Agency analysis (pdf).
    Who Voted "Yes" and Who Voted "No"

  7. Received in the Senate on November 10, 2005.
  8. Passed 35 to 3 in the Senate on November 10, 2005, to "securitize" tobacco settlement revenue as part of an agreement struck between Gov. Jennifer Granholm and Republican legislative leaders to adopt modest business tax cuts and a scaled-down "21st Century Jobs Fund." The latter would be given $400 million of "securitized" tobacco settlement revenue right away, and $75 million per year for eight years from the remaining “unsecuritized” settlement revenue stream. Future legislatures would not be bound by the $75 million per year agreement, however. The tax cut is described under the final votes on Senate Bill 633, and details of the full package by a Senate Fiscal Agency analysis (pdf).
    Who Voted "Yes" and Who Voted "No"

  9. Signed by Gov. Jennifer Granholm on November 21, 2005.

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