Iowa Public Television


Tobacco Settlement Dollars Bolster State Budgets

posted on December 6, 2002

Hello, I'm Mark Pearson.

U.S. companies slashed more than 40,000 jobs last month, sending the nation's unemployment rate to six percent in November. That matches an eight year high and raises new concerns about the strength of the economic recovery.

Meanwhile, orders to U.S. factories rose for the first time in past three months.

Meanwhile, on Friday President Bush shoved two cabinet members (the Treasury Secretary and an economic advisor) from their jobs in a shakeup designed to control political damage from the ailing economy.

The outlook isn't any brighter under the nation's statehouse domes. Virtually every state in the nation is enduring a deficit and many states are eyeing the 246-Billion dollar Tobacco Settlement Fund as a way to bolster the budget.


The 1998 Tobacco Settlement created an enormous fund designed to compensate individual states for health issues and future anti-tobacco education efforts. Payments from the $246-Billion fund are being dispersed over a 25 year period, but in some cases, the money is being used for purposes other than those outlined in the original legal decision.

Motivated by flagging tax revenue, several states are using a portion of the tobacco settlement payout to solve monetary short falls. A report from the National Conference of State Legislatures shows, of the $31-billion allocated over the past two fiscal years, 26% went to bolster endowments or state budget reserves. Even so, the Conference pointed out that 45% of the money is being used for health care.

At the same time, a recently released study by the Centers for Disease Control revealed the money allocated for anti-smoking education has been reduced by almost 15% over the past year. Only five states, Arizona, Massachusetts, Maine, Minnesota, and Mississippi are funding tobacco prevention programs at the minimum level recommended by the CDC to prevent further tobacco related health problems.

Meanwhile, the tobacco industry dodged a bullet this week when a Massachusetts law requiring the disclosure of cigarette ingredients was struck down by a federal appeals court. A consortium of tobacco companies challenged the law when it passed in 1996 stating it would divulge trade secrets. The ruling was hailed by cigarette makers as a confirmation of the need to protect proprietary interests while detractors of the decision were not surprised by the ruling

It's just another chapter in the history of an industry that finds cultivators of the golden leaf whipsawed by a government that both promotes the raw commodity through allotments and condemns the finished product through adjudication.


Tags: courts government money news smoking tobacco