US: Settlement Provides Cigarette Makers a $100 million Break on Payments to State

Source from:  Buffalo News 10/23/2015

The nation's big cigarette makers have managed to snuff out a long legal tussle, winning the dubious reward of a reduction in the amount of money they will have to pay New York State from the historic settlement of 1998.

No cheers are due Big Tobacco, which should not be able to get around the payments it agreed to make for the decades of damage done to the health of millions of Americans.

The dispute centered on the 1998 Master Settlement Agreement, the landmark deal in which tobacco companies agreed to pay billions of dollars to states to reimburse them for the costs of health care associated with cigarette smoking. In 2003 the companies that signed on to the agreement argued that their payments should be reduced because of growing sales of cigarettes by Native Americans, who were not part of the deal.

Under the settlement, the state sides with Big Tobacco, meaning industry giants such as Philip Morris will save nearly $100 million a year. New York State Attorney General Eric T. Schneiderman announced the settlement, and said that in return, the companies will release "$550 million belonging to New Yorkers that has been trapped in an escrow account during a decade-long dispute between the state and the major tobacco companies."

Under the terms of the settlement, New York State ends up with more than half of the settlement's proceeds, or $281.5 million, and New York City will get $146.7 million. Erie County is expected to receive $12 million.

Don't expect scads of money to be thrown at anti-smoking campaigns. States and local governments in the past have used their windfalls for a variety of unrelated expenditures. Niagara County spent $700,000 for a public golf course's sprinkler system and $23 million to pay off existing debt, including the cost of the expansion of the jail. There are worse examples. In North Carolina, $42 million of the settlement funds went to tobacco farmers for modernization and marketing.

New York State should spend a big chunk of the money on anti-smoking efforts, because reducing smoking rates improves the health of New Yorkers and saves the state money in the long run. However, the smart money says the cash will be used on other expenditures. So, borrowing from a line related to another vice, we ask that the state please spend responsibly. Enditem