Law Suits: CT Accounting sought on tobacco money

Connecticut Connecticut’s congressional delegation wants to know what has happened to the nearly $1 billion the state has received from a 1998 landmark tobacco settlement.

Congressional Letter To Rell On Tobacco Settlement
January 9, 2008
Governor M. Jodi Rell
444 North Capitol Street NW
Suite 317
Washington, D.C. 20001
Dear Governor Rell:
We are writing to inquire about funding the state of Connecticut receives annually from the Master Settlement Agreement reached with four major tobacco companies in 1998. We are troubled to find in a report released by the Campaign for Tobacco-Free Kids in December that Connecticut ranks last amongst the states in the amount of settlement money it puts toward smoking and tobacco cessation efforts. We would like to request a detailing of the activities Connecticut has spent its share of the settlement money on from 1998 through 2007 and how it plans to spend future funds derived from the settlement.
As you know, tobacco is the leading cause of preventable death in the United States, and according to the CDC, over 440,000 deaths and more than $96 billion in medical expenses are caused by cigarette smoking per year. In Connecticut alone, smoking causes $1.63 billion in health care costs annually. Approximately 416,000 children become new, regular smokers each year, 5,400 of those in Connecticut. The 1998 settlement with Phillip Morris, R.J. Reynolds Tobacco Company, Brown & Williamson Tobacco Corporation, and Lorillard Tobacco Company was the largest civil settlement in United States history, and rightly committed these companies to paying states for the astronomical health care costs they incurred due to tobacco and smoking.
The Master Settlement did not dictate how states could spend this money, but a large portion of the annual settlement money should clearly be spent on health care costs and smoking cessation and treatment programs. The state of Connecticut has received nearly $1 billion thus far from the settlement, but has spent less than one percent of that money on smoking prevention, according to the Campaign for Tobacco-Free Kids. We understand that Connecticut has some recent and planned expenditures for tobacco-related programs, but those amounts still fall short of the Centers for Disease Control’s 2006 minimum spending target of $21.2 million per year.
We are concerned that the money Connecticut has been awarded in this settlement is not being utilized to its maximum capacity for the health of the state’s residents. That is why we would like to request, for review, a detailed explanation on how Connecticut has spent the money it has received from the Master Settlement from 1998 through the present and comprehensive information on future plans for expenditures in this area. We believe it is critical to remedy this situation and invest these resources in tobacco-related costs.
Thank you for your attention to this matter and we look forward to hearing from you.
Member of Congress
Member of Congress
Member of Congress
Member of Congress
Member of Congress

Accounting sought on tobacco money

WASHINGTON — Connecticut’s congressional delegation wants to know what has happened to the nearly $1 billion the state has received from a 1998 landmark tobacco settlement.
In a letter sent Wednesday to Gov. M. Jodi Rell, the delegation is asking for an explanation of how the money has been used in light of a report from the Washington-based Campaign for Tobacco-Free Kids that showed the state last in the nation for spending on tobacco prevention.
The anti-smoking advocates said Connecticut did not set aside any settlement money for tobacco prevention in the 2008 fiscal year.
Instead, the state placed last year’s $140 million settlement payment into its general fund. Connecticut has spent less than $10 million from the settlement on smoking prevention since 2000, they claim.
“It is simply unacceptable that Connecticut has not yet allocated the money from the tobacco settlement agreement to its intended use,” said Sen. Chris Dodd, D-Conn. “This year alone, 440,000 Americans will die from tobacco-related illnesses and almost just as many children will become new smokers.” Sen. Joe Lieberman said the report that Connecticut ranked last in spending for prevention and smoking cessation is “worrisome.”
And, Rep. Rosa DeLauro, D-3, said the state was “missing an opportunity” to improve the health and well being of state residents.
“The costs of smoking related illnesses are over $1.6 billion in Connecticut today. By not investing in these programs today, the state
is putting itself in the position of facing even higher costs and poorer health for its citizens over the long-term,” she said. Reps. Christopher Shays, R-4; Chris Murphy, D-5; John Larson, D-1; and Joe Courtney, D-2, also signed the letter to the governor seeking an explanation of how the tobacco settlement money is spent.
Chris Cooper, a spokesman for Rell, said Wednesday that the office would be responding in detail to the delegation. He also took issue with the report saying that the state had a good record of curbing tobacco use.
“Connecticut has one of the lowest percentages of smokers in the nation,” Cooper said.
The state, he said, is spending more than $20.6 million on anti-smoking and cancer-related programs, although he conceded that only about $4 million is directly spent on anti-smoking efforts. Beyond that, Cooper noted that the state has seen a decline in cigarette sales over the last three years, in part, because of restrictions on smoking in restaurants and a recent 49-cent hike in the tobacco tax to $2 a pack.
“Those are two of the most effective ways to discourage tobacco use,” Cooper said.

Nobody ever promised to escrow tobacco cash
By Chris Powell

So what if Connecticut ranks last in the nation in spending to discourage smoking? While this aggrieves the Campaign for Tobacco-Free Kids and Attorney General Richard Blumenthal, it seems to bother few others in the state.
This indifference may arise from Connecticut’s belief that smoking’s dangers are obvious and from the state’s social libertarianism. For simply as a rite of passage to adulthood many young people are going to try smoking, just as many are going to try drinking alcohol. Maybe somewhere in Connecticut there is a teen-ager who smokes or drinks because he doesn’t know it can hurt him or because of insidious advertising by what the attorney general likes to call “Big Tobacco,” but even so there will be no outlawing adolescence.

Besides, the premise of the complaint about Connecticut’s lack of spending to discourage smoking is false: the premise that when the state accepted its bonanza from the settlement of the great lawsuit against the tobacco companies, it also accepted an obligation to spend the money to discourage smoking.

In fact, Connecticut’s attorney general acted on his own when he joined other state attorneys general in suing the tobacco companies, supposedly to recover medical costs incurred by government because the companies had tricked people into smoking. As with other damage lawsuits brought by the attorney general, the governor and the General Assembly may have been glad of the chance to win some money, but they never made any promises about spending it.

Also bogus was the premise of the lawsuit itself. For however deceptive the tobacco companies were, 40 years already had passed since the government officially had declared smoking harmful, and a few hundred years had passed since smoking had been widely recognized as such. More important, long before the tobacco lawsuit was filed, government had put tobacco firmly under its control through excise taxation. That is, whatever the public health costs of smoking, government was already in a position to recover them — and did recover them, and plenty more besides.

Between excise taxes and the Social Security and government pension payments that were never collected because of premature death caused by smoking, as a merely financial matter tobacco long had been hugely profitable for government, not a loss. Tobacco’s medical costs to the government were more than offset by taxes and forfeited pensions.

Despite its mock moral fervor, the lawsuit against the tobacco companies was only a device by which taxes were raised without legislation, since the tobacco companies happily financed the settlement just by raising cigarette prices all together. The lawsuit also was a device by which the attorneys general awarded fantastically lucrative patronage to special friends, private lawyers to whom most of the work of the lawsuit was assigned. These private lawyers siphoned hundreds of millions of dollars out of the transaction in a shamefully and unnecessarily expensive form of tax farming.

Maybe Connecticut should spend more to discourage smoking. But regardless of the $140 million put into the state’s general fund last year from the tobacco lawsuit settlement, any such public need must compete with all other public needs. And the last session of the General Assembly was actually quite sensitive to public health; it greatly increased the appropriation for medical care for the poor, a need far more compelling than the need to tell people the obvious, that smoking is bad. Last year the legislature and the governor also tripled Connecticut’s tobacco excise tax, from 49 cents to $2 per pack of cigarettes, which probably did more to discourage smoking than anything else could have done, even though the tax increase was hugely regressive, falling hardest on the poor.

Unfortunately those who clamor for more spending to discourage smoking never help the governor and legislature prioritize public needs. For while the governor and legislature always know very well that many undertakings are good, they do not always know which undertakings are more deserving than others. Sometimes — even often — the governor and legislature know only which undertakings have the most support from special interests.

If Connecticut spends little to discourage smoking, the state still has, for example, the best-compensated public employees in the country. Indeed, much of the tobacco settlement money is spent precisely to keep Connecticut first in this respect. If that bothers the enemies of “Big Tobacco,” they aren’t saying.


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