25 years ago, ‘all the stars came together’ to create the Tobacco Commission

By all accounts, it was Ted Bennett who first figured out what was happening — and what could happen.

This was back in 1998 and Bennett at the time was a Democratic member of the House of Delegates from Halifax County, back when Southside still sent Democrats to Richmond.

He had started hearing from tobacco farmers in Halifax that big changes were coming to their industry and, from the standpoint of farmers, those changes wouldn’t be good. It didn’t take long for Bennett to sniff out the legal issue behind this — the so-called “master settlement” between tobacco companies and the 46 state attorneys general who had sued them to recover health care costs for treating patients diagnosed with tobacco-related illnesses.

This was a complex deal — the text runs 88 pages — but those Halifax farmers already sensed what it would mean: There’d be less tobacco grown. Bennett also discovered something else: Each state was in line to get a truckload of money. (To date, Virginia has received $3.3 billion.) “When I saw the amount of money that Virginia was getting from this national settlement, the dots got connected,” Bennett said in a recent interview.

Whitt Clement, then a Democratic delegate from Danville, picks up the story from there. In the summer of 1998, he and Bennett met with a group of tobacco farmers at what was then the Masonic Temple in Danville — at 10 stories, “the tallest building in Danville” at the time, Clement said.

Several things were happening at once. The federal government was phasing out tobacco quotas, which served to regulate the price of tobacco. Meanwhile, this master settlement with the tobacco companies was going to restrict tobacco marketing — no more Joe Camel, no more Winston Cup racing series. Taken together, that could only mean one thing: Tobacco-growing regions were going to take a big economic hit. “It’s going to put a lot of us out of business,” Clement recalls the tobacco farmers saying. That would hurt more than just farmers. Tobacco was “truly foundational” to Southside’s economy at the time, Bennett said.

Out of those meetings in the summer of 1998 came a plan, the impact of which is still being felt today across Southwest and Southside. Time has jumbled memories of the precise sequence of events, but at some point early on Clement enlisted the help of Charles Hawkins, then the state senator for much of Southside — and a Republican. We often hear that on regional matters, party loyalties disappear, and this was one of those. The Southside legislators (and eventually the Southwest ones) all joined together, regardless of what party letter came after their name.

Tobacco wasn’t the only economic pillar that was collapsing in Southside in the late 1990s.

“We woke up one morning to find our economic fox was in the ditch,” Hawkins says. “Everything we depended on was gone — furniture, textiles, tobacco. At one time Dan River Mills was the second-biggest employer in the state, behind the shipyards, with 12,000 people. All those jobs went away. Something had to be done otherwise or we weren’t going to make it.”

That something became the Tobacco Region Revitalization Commission, more popularly known as simply the Tobacco Commission.

The key was all that money coming into the state from the master settlement. The legislators wanted to take part of that — about $1 billion — and use that as an endowment to help underwrite the creation of a brand new economy in Southside. And Southwest Virginia, too, which also grew tobacco, just a different type. Southwest was seeing the same economic transition as Southside was, just with coal, rather than furniture and textiles.

In hindsight, it’s remarkable that such a bold thing was created with a minimum of political fuss. “All the stars came together on that,” Hawkins says. “People understood what happened to our economy through no fault of our own.”

For those who understand that sometimes it’s the small things that make a big difference, Clement shares some of the legislative intrigue at the time. Some legislators wanted to propose a study. He thought that would take too long. He wanted to pass a bill before anyone else got ideas about what to do with the money. Clement credits John Garka of the Division of Legislative Services with coming up with the commission’s name. Garka’s first draft of the bill — the division is the agency that takes legislators’ intentions and puts them into bill form — said the commission would serve “tobacco-growing” localities. “I said no, it’s got to be tobacco-dependent because Danville didn’t grow any tobacco but had a hell of a lot of warehouses,” Clement says.

Jim Gilmore was governor then and while he was supportive, his top attorney wanted lots of changes. Specifically, he wanted to give the appointment power to the governor, not the legislature. Clement, being a legislator, felt differently — “I was appalled” — and went to talk with Del. Terry Kilgore, R-Scott County. “I said, Terry, you know the next governor might be from Northern Virginia — Mark Warner. We can’t have someone from Northern Virginia putting people on this tobacco commission.” That argument proved quite persuasive with Republican legislators who otherwise were inclined to go along with a Republican governor. (Of course, we’ve since had a Speaker of the House from Northern Virginia, so in that case we still wound up with someone from Northern Virginia making some appointments to the commission.)

Clement jokes now about why he thinks the legislation creating the tobacco commission passed unanimously in 1999. “The reason it passed was there was no money yet! In hindsight, it was brilliant. Everybody voted for phantom money that wasn’t any hair off anybody’s hide. And then when money started flowing in, it was like a damn gusher. These Northern Virginia legislators were saying, ‘What in the hell have we done?’”

What they’d done was something only one other state did. Many used their tobacco settlement money for health programs. Seven put all or virtually all of it into their general fund. Only Virginia and North Carolina specifically created a fund to rebuild the economy of those tobacco-growing — er, tobacco-dependent — regions.

A quarter-century later, it’s fair to ask how Virginia’s tobacco commission has worked out.

Let’s be honest: In the first years, maybe not so well. The commission was criticized early for doling out money without sufficient regard for whether there would be a significant economic impact — the classic story was the commission granting money to a woman who wanted to make jelly that had been endorsed by old-time music star Ralph Stanley. A 2011 report by the Joint Legislative Audit and Review Commission was critical, saying the commission “does not consistently follow a strategy for achieving economic revitalization and has funded projects that have limited potential for significant economic impact.” (To be fair, JLARC reports are supposed to be critical; that’s the legislature’s watchdog arm.) Former Gov. Gerald Baliles, a Democrat with roots in Patrick County and a deep affinity for rural Virginia, was also a critic; he felt the commission spread money around too much — he would have preferred to see fewer awards, but for larger amounts of money, to have a more transformative impact. The commission, though, was set up to guarantee that every locality got some money. Baliles was expressing the ideal; the legislative sponsors were reflecting the political realities.

In the absence of a new JLARC report, there are some other ways to measure the commission’s impact: Where would Southwest and Southside be today if there had been no Tobacco Commission?

“Oh my gosh, we could have done better but it’s been enormous,” Bennett said. “It’s been a pervasive impact. Sometimes that’s not so obvious when you’re dealing with infrastructure, but it’s built so much water, sewer, industrial parks.”

Scott Simpson, the county administrator in Halifax County, points to two recent economic development announcements in his county. Hitachi Energy now has nearly 500 employees at its South Boston plant that makes transformers. IperionX is building a facility where it will recycle titanium powder and employ more than 100 people. Both those companies are in buildings that were constructed with funding from the Tobacco Commission. The commission grants that helped fund those “have been a serious boost to our competitiveness,” Simpson says.

Clement points to the Institute for Advanced Learning and Research in Danville as another facility that was funded with Tobacco Commission money. “I’m sure a lot of money has been wasted, but I’d like to think most of it has been well spent,” he says. “IALR — I don’t know of a project that has meant more to several counties than that has.” Decades ago, only one bank was willing to loan money to build the institute, Clement says, and then only because of the promise that Tobacco Commission money would be available to pay off the loan.

Perhaps the most invisible — but transformative — thing the commission has done is pay for  more than 3,000 miles of broadband fiber in the region that wouldn’t have been laid otherwise. “The telecommunications piece may be the most important thing it’s done,” Hawkins says.  A less well-known program has been the tobacco commission’s role in paying off student debt for college graduates in key fields who agree to live in the region to take hard-to-fill positions, particuarly in education, health care and technology. (Here’s a previous Cardinal story on that program.)

Hawkins says we need to remember where Southwest and Southside stood in the late 1990s: “We were not only losing jobs, we were losing youth — they were leaving nothing to stay for,” he says. “Without the Tobacco Commission, we’d have gotten older, poorer and less educated.”

Southwest and Southside have still gotten older — almost every place has — but since the pandemic, we’ve seen a demographic turnaround in most parts of rural Virginia. Most localities are now seeing more people moving in than moving out. It’s hard to trace that specifically to the Tobacco Commission — there are communities outside the commission footprint that are seeing similar demographic trends — but it’s also hard to imagine those migrations happening if broadband hadn’t been available. Put another way: Parts of Southwest and Southside are still waiting on broadband; more would have been waiting without the Tobacco Commission.

“The commission has allowed Halifax County and all of Southside and Southwest Virginia to continue to provide quality of life community development improvements as well as economic development growth to position our rural areas to be as competitive as the urban areas for businesses, visitors and residents,” Simpson says.

All that began 25 years ago when Gilmore inked the Tobacco Commission bill into law — or, perhaps, 26 years ago when there was that first meeting with tobacco farmers in Danville. Here’s another measure of how much things in Southside have changed in that time: That Masonic Temple where the farmers and legislators met is still there but it’s no longer the tallest building in town. That will be the Caesar’s casino, which will be 12 stories and the tallest building in Southside.

Is this the worst governor in Virginia history?

Some people sure think so. This is Lord Dunmore, the last Colonial governor of Virginia. George Washington once called him “an arch traitor to the rights of humanity.” He’s accused of burning Norfolk. People in the Shenandoah Valley were so unhappy with him that they stripped his name from Dunmore County and renamed it Shenandoah County.

Now a Norfolk-born historian is urging a more nuanced look at Dunmore’s career, because of his role in freeing some of Virginia’s enslaved population.

We’re coming up on the 250th anniversary of the Declaration of Independence in 2026. As part of that, Cardinal has embarked on a three-year project to tell the little-known stories of Virginia’s role in that event. Our next installment publishes Tuesday, and one of the stories will look at Dunmore. You can sign up for our monthly Cardinal 250 newsletter, or any of our other free newsletters (including our weekly political newsletter) here:

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