States To Spend Half of National Tobacco Settlement on General Purposes
States will likely spend about half of the $7.9 billion that they will receive from the national tobacco settlement in the current fiscal year on general purposes -- a higher amount than last fiscal year -- and spend a decreased amount on anti-tobacco and health-related programs than they did last fiscal year, according to a National Conference of State Legislatures study released Thursday, the Wall Street Journal reports. States by law do not have to use tobacco settlement payments for such programs, but many "publicly declared their intentions to do so," the Journal reports. The study found that in the current fiscal year, which ends June 30, states will likely spend about 47% of their tobacco settlement payments on general purposes, compared with 29% in the last fiscal year and about 16% in each of the previous three fiscal years. States will likely spend 3% of their tobacco settlement payments on anti-tobacco programs and 28% on health-related programs in the current fiscal year, the study found. In addition, 16 states to date have sold bonds backed by future tobacco settlement payments in exchange for reduced lump sum payments that they will likely spend on general purposes, "shortchanging already underfunded health care programs," the Journal reports. State lawmakers also "have gone out of their way" to protect their tobacco settlement payments, the Journal reports. More than 20 states have enacted laws supported by Philip Morris USA that limit the amount of bonds that defendants must post to appeal large jury awards in lawsuits. According to Philip Morris, large bond requirements could affect the ability of tobacco companies to issue future tobacco settlement payments. In addition, about 35 states have enacted laws that allow only the sale of cigarettes manufactured by tobacco companies that make settlement payments or place settlement funds in an escrow account.
Senate Commerce Committee Chair John McCain (R-Ariz.) said that in the next few months he plans to hold hearings on state expenditures of tobacco settlement payments. "The clear impression conveyed to everyone when this deal was cut was that the money would be used for tobacco education and treatment," he said, adding, "Obviously that hasn't happened. As the states experience greater budgetary problems, the tobacco money has become their go-to slush fund." Study co-author Lee Dixon, director of the NCSL Health Policy Tracking Service, said, "In the past two years, tobacco dollars have become very important as substitutes for revenue." Washington state Attorney General Christine Gregoire (D), a lead negotiator of the tobacco settlement, said, "We made it clear this money was restitution for a lawsuit and was supposed to be used to right a wrong. It was meant to be used for tobacco prevention and public health." Mississippi Attorney General Michael Moore (D), also a lead negotiator of the tobacco settlement, added, "States should spend the money on what the fight was about: smoking and health" (O'Connell, Wall Street Journal, 10/9). The study is available online. Note: You must have Adobe Acrobat to view the study.This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.