States using tobacco settlement to fix budget problems
WASHINGTON (AP) — State budget makers across the country can’t seem to get enough of their tobacco settlement money.
Lawmakers are increasingly plugging budget holes with the $206 billion settlement that 46 states reached with cigarette makers in 1998, according to a federal report released Monday.
State officials said at the time of the settlement that the goal was to recover the cost of treating sick smokers.
But the report by the General Accounting Office, the investigative arm of Congress, found states spent just 24 percent of last year’s settlement earnings on health-related initiatives. States plan to spend even less — 17 percent — on health programs this year.
In contrast, states spent 36 percent of their settlement dollars fixing budget shortfalls last year, and states plan to spend 54 percent to address budget deficits this year, according to the report.
State officials pledged in 1998 to spend the settlement money on anti-smoking and other health-related initiatives, although the agreement didn’t require states to allocate the money toward anything specific.
“There was no obligation in the settlement to do it, and that was one of the weaknesses of the settlement,” said Vince Willmore, a spokesman for the Campaign for Tobacco-Free Kids.
The report noted that Tennessee devoted all the money it received under the settlement last year, about $180 million, to address budget shortfalls. Tennessee plans to count the money it receives under the settlement this year as general revenue, meaning it is not being allocated toward a specific purpose.
The 46 states that signed the settlement agreement with the companies are supposed to get the $206 billion over 25 years.
Last year, those states received about $12.8 billion under the settlement. About half was money the tobacco companies paid to the states. The rest came from proceeds some states earned for selling bonds backed by payments tobacco companies are supposed to make in the future.
Four states — Florida, Minnesota, Mississippi and Texas — settled their suits with the tobacco industry shortly before the 1998 agreement was reached by the 46 states and the companies. The GAO report didn’t track the spending of the four states that settled first.
Congress included a provision in the 2002 farm bill requiring the General Accounting Office to examine annually how the states that joined the masters settlement agreement spend the money they receive.
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On the Net:
General Accounting Office: http://www.gao.gov/