Smaller tobacco payment likely; Texas agreement tied to national smoking rates
Texans are quitting smoking at half the rate of their fellow smokers across the country, yet the state stands to lose as much as $90 million in tobacco settlement proceeds because smoking has decreased sharply nationwide.
Since 1998, cigarette sales have plummeted 14.2 percent nationwide, but are down only 7 percent in the Lone Star State. However, Texas' historic settlement with the nation's largest tobacco companies ties the annual payments to national smoking rates.
That means that instead of the $1.8 billion Texas was expecting for the two-year budget cycle that began in September 1999, it might receive only $1.71 billion. The problem is that lawmakers spent the entire amount they were expecting on health initiatives and programs to combat tobacco use.
Assistant Attorney General Andy Taylor, who oversees the state tobacco settlement, said the agreements with Texas and other states were designed to cut smoking rates across the board.
"Whether Texas has a higher cessation rate or a lower cessation rate than the nation as a whole is totally irrelevant to our payments," Taylor said. "Our payments go up or down based on the national rate."
The U.S. Agriculture Department reported that Americans smoked about 435 billion cigarettes in 1999, 6.5 percent less than they did a year earlier. Consumption per person, based on an 18 and older population, dropped by 174 cigarettes. The breakdown for Texas was not available.
Texas sued the tobacco industry in 1996 to recoup the state's cost of treating sick smokers. The case was settled two years later, with the industry agreeing to pay the state about $17.3 billion, which will be paid in installments.
Last year, Texas lawmakers parceled out the $1.8 billion installment it had expected from the tobacco settlement among several new health-related trust funds, a health insurance program for children in low- income families, and other health initiatives and anti- smoking efforts.
Money will probably be shuffled from interest in the trust funds or "borrowed" from future tobacco proceeds to make sure that the programs established for the 2000-01 budget year are fully funded.
But the anti-tobacco campaigns and the ever-increasing price of cigarettes haven't forced Texas smokers to ignore their urge for a nicotine fix to the extent it has in other states.
When cigarette prices went up in Fort Worth this year, longtime smoker Deana Hentz didn't think about quitting -- she just switched to a cheaper brand.
"I know people who say that when the price gets to a certain amount, they're quitting," Hentz, 31, said taking a deep drag off a Misty Ultra Bite during a break from her job at a downtown insurance agency. "But they never do."
Hentz said she can't think of anyone who quit smoking because of cigarette prices. Neither can 45-year-old Carolyn Pitts.
Pitts said that her mother died of lung cancer and that she, too, had a lung removed a year later. If those two adversities weren't enough to make her stop smoking, she asked, why would a rise in price of a pack of Virginia Slims?
"I know what smoking does," she said. "It's just so hard to quit."
Carole Malone, 59, an unemployed schoolteacher, said she spends about $2.25 a day on a pack of GPC brand cigarettes. The price includes 41 cents in state taxes and 34 cents for the federal government.
"I like to smoke, I enjoy it," Malone said. "And as long as I have enough money to smoke, I will."
Such sentiments keep Dave Outlaw in business.
Outlaw, who owns Drive Thru Discount Cigarettes in Arlington, said the rising cost has just made smokers more resourceful. Like Hentz, they have found cheaper brands or they buy in bulk at discount stores like his.
He said he hears his customers grumble about the price, but they pony up for a carton of smokes.
"When the price went from 50 cents to a $1 a pack I even quit -- for about an hour," Outlaw said.