Douglas defends record of tobacco divestment

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(Host) Vermont’s investments in tobacco companies have become the latest flap in the gubernatorial campaign. Some Democratic lawmakers are criticizing State Treasurer James Douglas for failing to divest all tobacco holdings from state pension funds. But Douglas, who is now the Republican gubernatorial candidate, says the Democrats have misrepresented the issue.

VPR’s John Dillon has more.

(Dillon) Five years ago, Treasurer James Douglas pushed the state retirement boards to sell off about $20 million of stock in tobacco companies. Douglas said at the time that he doesn’t like to micromanage the pension funds, but he said the public health issue raised by the tobacco holdings was too important to ignore. At Douglas’ urging, the three state boards that oversee the retirement funds voted to sell off their tobacco stock.

But Norwich Representative Anne Seibert says research by anti-tobacco activists shows that the teacher’s retirement fund still has some tobacco-related investments. Seibert says Douglas has touted his anti-tobacco stance in radio ads, but apparently hasn’t made sure the funds are completely tobacco-free.

(Seibert) “That is his job as state treasurer – to oversee all those managers who work under him. And if this something that he was really pursuing in 1997 and is now boasting about in his campaign ads, then he would surely have checked it out that we have fully divested.”

(Dillon) It turns out that the tobacco holdings are a fairly small portion of the one billion dollar teacher retirement fund. The fund maintains an account to manage its residual cash. That money – about $2.2 million – is invested in an index fund with holdings in the country’s largest 500 companies.

Douglas says about 1.5% of those companies are tobacco-related. So he says the total tobacco investment is around $30,000.

(Douglas) “Out of a billion dollar fund, this is inconsequential.”

(Dillon) Douglas says the Democrats are now playing politics with the issue. He says his Democratic opponent Doug Racine is using surrogates to attack him on the tobacco issue.

(Douglas) “In fact I’m very, very proud of my stewardship of Vermont’s financial resources. We’ve grown these pension funds by more than a billion dollars since I’ve been state treasurer. We outperformed the median public funds around the nation by more than .5% per year. We’ve lowered our total bonded indebtedness. I’m proud of my record and that includes the divestiture of tobacco stock.”

(Dillon) The Democratic lawmakers say they didn’t coordinate their work with the Racine campaign. They question Douglas’s claim that the state pension accounts are fully tobacco free, when one retirement fund does contain some tobacco holdings.

For Vermont Public Radio, I’m John Dillon in Montpelier.

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