State Tobacco Payments Lowered
HARRISBURG, Pa. (AP) - Sixteen of the 46 states that settled with the tobacco industry two years ago have seen their most recent payments reduced by almost $200 million, in part because they failed to enact a piece of legislation in time.
The December payouts to both California and New York were $44 million less than the $247 million they had each expected to get, while Pennsylvania received $111 million instead of $130 million.
In all, about $197 million was withheld from the 16 states and five American territories.
The settlement with Big Tobacco totals about $206 billion over 25 years. The twice-a-year payouts to the states are determined by an independent auditor.
Some previous payments have been lower than projected because of slowdown in cigarette sales and inflation.
The latest payments were cut because the states and territories failed to pass a law by June 1999 designed to protect the tobacco companies from losing too much market share to other manufacturers.
The industry feared that the nonparticipating companies might gain an advantage because they would not be restricted by the settlement's ban on billboard advertising and other marketing tactics, such as cartoon images like Joe Camel.
Under the law that the states were expected to enact, nonparticipating manufacturers were given the choice of signing onto the settlement or making annual payments into an escrow account equal to the market share loss.
All 46 states have since enacted the law and will get their full regular payments in the future.
Some state officials said it is unclear what effect the loss of the money will have.
Pennsylvania, for example, has not yet enacted legislation putting the tobacco money to use. In California, the tobacco payments go directly into the state's general fund and are not earmarked for any specific purpose.
Even so, the states are considering suing to shake the money loose with the help of the National Association of Attorneys General.
``We're confident we'll prevail,'' said Sean Connolly, a spokesman for Pennsylvania Attorney General Mike Fisher.
New York is expecting a total of $25 billion over 25 years, California $24 billion and Pennsylvania $11 billion.
The other affected states, according to group of attorneys general, are Alabama, Arizona, Connecticut, Delaware, Hawaii, Kentucky, Massachusetts, Michigan, North Carolina, Oregon, Vermont, Wisconsin and Wyoming.
The American territories are American Samoa, Guam, Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands.
Four states - Mississippi, Florida, Texas and Minnesota - signed separate deals with the tobacco industry for a combined $40 billion and were unaffected by the June 1999 deadline.