State, counties get first annual tobacco settlement payment
ALBANY, N.Y. (AP) The state, New York City and counties outside the city will get $441 million Monday under the settlement with tobacco companies.
But the checks will be about 12 percent smaller than projected last year when the payment schedule under the cigarette settlement was outlined by tobacco companies and government officials.
The reduction is due to a drop in cigarette consumption. One of the provisions in the settlement insisted upon by tobacco companies called for payments to be reduced if fewer cigarettes were being sold.
In addition to the payments, the settlement also called for manufacturers to cease certain marketing techniques and advertising, especially those aimed at young people.
''We view this as good news that the state is getting less money because that means fewer cigarettes are being smoked and we assume fewer kids are starting,'' Blair Horner of the New York Public Interest Research Group said.
The payment made by tobacco manufacturers on Dec. 31, 1999, was about 13 percent lower than initially projected, also because of the drop-off in cigarette consumption.
Experts say a price increase of about 45 cents a pack, instituted by tobacco companies when the settlement was reached with the states, is behind the falloff in sales.
Since the consumption figures are based on national numbers, the expected reduction in cigarette sales due to New York's near doubling of its cigarette tax from 56 cents a pack to $1.11 a pack as of April 1 will have little effect on national sales.
The payments expected Monday will bring to $1.03 billion the amount paid to governments in New York by tobacco companies in three installments since Dec. 14, 1999.
The money is designed to reimburse taxpayers for what they have spent over the years on tobacco-related illnesses through publicly funded programs like Medicaid. Localities can use the money for any purpose.
''We have now received over $1 billion in just four months, with billions more to come in the years ahead,'' state Attorney General Eliot Spitzer said. ''Our long, hard fight against Big Tobacco is now finally paying off for the citizens of New York.''
In all, New York state is scheduled to receive $25 billion over the first 25 years of the tobacco settlement, with the state and local governments sharing the money almost evenly.
Tobacco companies will make payments each January and April through 2003, then a single payment each April for the next 20 years.