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Friday, November 18, 2011

State finalizes tobacco bond sale

Posted at 2:00 PM on November 17, 2011 by Tom Scheck * MPR News

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.

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