Minnesota Finance officials say they have sold $757 million in bonds tied to the state’s future tobacco payments. Minnesota Management and Budget says it finalized the bond sale – a move that was needed to help close the state’s budget gap. $640 million of the $757 million bond sale will go to fix the state’s budget deficit. The remaining $117 million will go into a special account to cover the cost of issuing the bonds and creating a reserve to pay back bondholders. The bonds are backed by future payments from the state’s 1998 settlement with tobacco companies. The state will eventually pay bondholders $1.2 billion over the life of the 20 year bonds.
Governor Dayton and the Republican-controlled Legislature used the tobacco bonds to help end a three week government shutdown. Critics of the sale say the one-time money doesn’t address structural problems in the state’s budget. They say only permanent tax increases and/or spending cuts will do that.
You can read more about the sale here.