Tobacco’s woes
may cut state
paybacks

Fewer cigarette sales mean
smaller payouts but an official
says Hawaii's first payment
likely won't be affected

From staff and wire reports

HARTFORD, Conn. -- States are slated to get less money from the tobacco settlement than initially thought, because of an expected nationwide decrease in cigarette shipments.

Under a little-noticed "volume adjustment" provision of the settlement, Connecticut stands to see up to 10 percent less than the $166 million it expected to collect between now and April, said Marc Ryan, the director of the governor's budget office.

Other states also stand to come out with less money as tobacco shipments and sales decline because of high price increases and anti-tobacco campaigns that started after cigarette makers settled lawsuits with the states last year.

The exact reduction has not yet been calculated. It will affect settlement payments due to states in April.

Hawaii's expects its first national tobacco settlement payment of $14.7 million in the first week of December. Total payments over 25 years are expected to be $1.1 billion.

State Health Director Bruce Anderson said today he doesn't believe the reported decrease will affect the first payment to the state, but payments in future years may be affected by declining tobacco sales. "I haven't heard of any decrease in the funding that is promised to the state this year," he said.

Anderson said the $14.7 million is already in an escrow account and should be available in a few weeks. Plans are in place to "hit the ground running" once those funds are available for programs.

By law, 60 percent of Hawaii'stotal settlement will go toward control of tobacco consumption and prevention, as well as to promote healthier lifestyles and children's health.

The remaining 40 percent will go into a state "rainy day" fund.

The situation puts budget-crunchers at some other states in limbo as they plan to spend money they do not yet have on everything from education and health care to new roads and prisons.

"Frankly, the prudent thing to do is not to spend specific dollars until they see what they will be," said Laurie Loveland, a lawyer who helped negotiate the tobacco settlement for the North Dakota attorney general's office. "I think it's a mistake for state legislatures to become addicted to the tobacco money."

Tobacco companies agreed to pay around $206 billion over 25 years to settle lawsuits against them by Connecticut and 45 other states over the costs states incurred to treat sick smokers.