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Lobbyist Money Help  

Promise of tobacco settlement wanes for health care, anti-smoking advocates

February 03, 2003
By: Jason McLure
State Capital Bureau

JEFFERSON CITY - When Missouri and other states reached a $206 billion settlement with tobacco companies in 1998, public health and anti-smoking activists looked forward to a welcome tide of state funding.

Five years later, many of those hopes have been dashed as a slowing economy has led many state governments to use tobacco money as a temporary fix for widening budget deficits.

Missouri has been no exception.

Gov. Bob Holden is asking the legislature to dip into nearly a half billion dollars of future tobacco settlement revenues to close this year's budget shortfall. Instead of health care, medical research or anti-tobacco programs, that money will be spent on a number of unrelated state expenses. These include constructions of playgrounds in St. Joseph and Springfield, tax refunds owed to Eddie Bauer Inc. and other large corporations, and debt payments from previous bond issues.

Bill Corr, executive vice president of the Campaign for Tobacco Free Kids, a lobbying group backed by the American Heart Association and the American Cancer Society, said the state has ignored its own rationale for suing the tobacco companies in the first place.

"When Missouri and other states sued the tobacco industry in 1997 and 1998, they said they were doing so to protect the taxpayers of the state who have been paying for tobacco-related health care costs for years and would continue to do so," Corr said. "The state has not spent a single penny [on tobacco prevention] even though in 2003 the state will receive $164 million from the tobacco companies as a result of that settlement."

Although many states have used tobacco money to close budget deficits, Corr said Missouri is an egregious example. According to Corr, tobacco companies spend nearly a third of a billion dollars annually advertising and promoting their products in Missouri.

Meanwhile, the state will receive $268 million in tobacco taxes and settlement payments this year. Corr said at least some of that money should have gone to protect the state's children from tobacco marketing, and that selling future settlement revenues in the form of securitization does not bode well for future efforts to curb smoking.

Daniel Landon, spokesman for the Missouri Hospital Association, said though the state was not under any legal obligation to spend the tobacco settlement on health care or anti-smoking programs, his organization had presumed the money would be used for smoking-related medical costs.

"It would be our hope that a substantial portion of that money if not all of it would be turned back into health care," Landon said. "That was the impetus for the original settlement in the first place."

Holden has said unless the legislature approves his plan to borrow money against future tobacco settlement revenues, he will withhold $350 million in state funding for schools and universities.

For Missouri's tobacco bonds to be offered tax-free, the state must show that it is spending the proceeds on capital improvements or one-time expenses. That is why the state's tobacco money will end up being spent on lawsuits, old debts and building improvements, thereby freeing up general revenue for other programs.

Rep. Vicky Riback Wilson, D-Columbia, supports the governor's plan. She said there was no point in the state's providing tobacco prevention education if it couldn't adequately fund its schools and colleges. She said that while smoking prevention, health care and medical research were all worthy goals, the state was in a crisis.

"Sometimes just like in our families we may be saving and working towards some very important goals, but if someone suddenly gets a very serious illness or is in a bad traffic accident and needs immediate care we sometimes have to put some of those other plans on hold," Wilson said. "I think that's sort of the situation the state finds itself in."