Michigan to fight cut in tobacco suit payout
The 46 states and the tobacco companies that signed a multibillion-dollar settlement are arguing about whether some of the states -- including Michigan -- should have the amount reduced by $200 million total.
Under the settlement, the companies can reduce the amount of money they pay the states if the companies lose 2 percent of their market share and if that loss is caused by the agreement, said Stewart Freeman, assistant attorney general in charge.
But, if a state has a statute protecting the tobacco companies' market share, that state is exempt from the reduction as long as the statute was in effect for six months during that year, Freeman said.
Gov. John Engler signed Michigan's statute Dec. 28, 1999, too late for the exemption to kick in for 1999.
But it can cover future years. As for 1999, Michigan could lose about $14 million.
"Assuming we have no other difficulties that come up and assuming everyone agrees the treasury was diligently enforcing the law for 2000, it is unlikely we would have this problem for year 2000," Freeman said of the loss of settlement money.
The 46 state attorneys general are fighting over the tobacco companies' numbers for 1999. They say the market did not shift by 2 percent. While they sort it out, the money will remain in escrow.
"This is a brawl," Freeman said. "It's not lost yet.
"Jennifer Granholm is taking it very serious."
Michigan received about $352 million from the tobacco settlement in 1999 and 2000, with an additional $83 million coming in this week and $170 million due in April, Freeman said.
Michigan is spending much of its money on scholarships, something critics say wasn't the settlement's intention.
"It's ironic that for purposes of public health, the loss of $14 million in Michigan doesn't mean a lot because the Legislature and governor here have seen fit not to spend any of the settlement proceeds on tobacco prevention or other public health initiatives," said Cliff Douglas, president of Tobacco Control Law and Policy, based in Ann Arbor. "It's not being used for the purposes that the settlement was reached, which was to combat the tobacco epidemic."