Revenue From Tobacco Settlement Flattening Out

Source from:  Texas-New Mexico Newspapers 11/02/2011

Big Tobacco's payments to New Mexico for smoking-related deaths are declining. Even so, at least one legislator said Monday this was no indication that cigarette companies were losing customers or profit margins. The falling numbers may be because of a shifting marketplace. Elisa Walker-Moran, a state economist, said New Mexico expects to receive $38.6 million from tobacco companies this year. That is down from $40.9 million in 2010. Walker-Moran also projected that the amount of revenue from the tobacco settlement will be flat in the next few years. One reason for the decline is that tobacco companies subject to the agreement are losing market share, Walker-Moran told a legislative committee. But state Rep. Gail Chasey, D-Albuquerque, said the lower payment to the state was but another example of how tobacco companies had maneuvered a mass settlement to their advantage. These cigarette makers may be losing some of the domestic market, but they are making that up with worldwide sales, Chasey said. Tobacco companies that settled lawsuits with New Mexico and 45 other states are using market changes to their advantage, she said. "They prevailed in a number of ways, and that was one of them," Chasey said. Tobacco has been under siege in the United States since 1994, when Mississippi's attorney general sued the four largest companies for health-care costs associated with smoking. Mississippi, Texas, Florida and Minnesota then reached individual financial settlements with major tobacco companies. The rest of the states and U.S. territories approved a joint settlement in 1998 with four cigarette giants - Philip Morris USA, R. J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp. and Lorillard Tobacco Co. At the time, the companies had 99 percent of the market share. Another 50 tobacco companies have since joined in the master settlement. New Mexico had hoped to stash half of the settlement money in its biggest savings account. But in recent times the state has had to spend that money to keep Medicaid solvent. Members of the New Mexico Legislature's tobacco committee also voted Monday to introduce a bill in January to include more cigarette companies and sales in the master settlement. The proposal would apply to cigarette packs with tax-credit stamps that are sold by tribes and pueblos. Republican Gov. Susana Martinez vetoed a similar bill last winter. Rep. Jim Hall, R-Los Alamos, later appointed to the House of Representatives by Martinez, said he would be willing to carry the bill next time. A Democrat, Sen. Lynda Lovejoy of Crownpoint, was the original sponsor. Enditem