Health, Smoking Prevention Benefit from Tobacco Settlement Money; Settlement Spares Many Programs from Budget Chopping Block

10/9/2003

From: Bill Wyatt of the National Conference of State Legislatures, 202-624-8667; http://www.ncsl.org

WASHINGTON, Oct. 9 -- States are maintaining their distribution of tobacco settlement revenue to health services, smoking prevention efforts and preventing cuts in key state programs, according to a report released today by the National Conference of State Legislatures.

State Management and Allocations of Tobacco Settlement Revenues 2003 shows states have appropriated more than $17.3 billion in tobacco settlement revenue for health-related services and research. Additionally, smoking prevention efforts have reached historic levels as 46 states have appropriated $1.8 billion towards this effort -- four times more than the federal government has devoted to similar programs.

"States clearly are responding to their constituents needs by dedicating large sums of their tobacco settlement funds to health services for the poor, elderly, disabled and other populations," says Lee Dixon, director of NCSL's Health Policy Tracking Service. "Without the tobacco settlement, many states would have been forced to cut these programs during these trying financial conditions."

State legislatures allocated more than $7.9 billion in tobacco settlement revenue in 2003, increasing the four-year total to $39.4 billion. Initially, as many as 20 state legislatures established set-asides for trust funds and endowments. This has proved to be financially wise as state legislatures drew down on these endowments and earmarks to address severe revenue shortfalls.

Additionally, California, Connecticut and New York securitized all or some of their tobacco settlement revenue. Over one-third (36 percent) of the 2003 allotment was appropriated to health-related services and research while 3 percent went toward smoking prevention projects. Other 2003 appropriations are as follows:

States Category Amount Percent of Total

37........Health Services............$2,252,483...............28 17........Long-Term Care................362,584................5 33........Tobacco Prevention............265,766................3 14........Research......................226,474................3 15........Education.....................379,374................5 11........Children and Youth............231,399................3 6.........Growers, Communities..........294,685................4 11........Endowments, Budget Reserves...195,442................2 35........Other.......................3,704,416...............47 50........Total Appropriations........7,912,723..............100

Dixon said states have also been able to leverage their tobacco settlement money to help ease the fiscal impact of skyrocketing Medicaid costs.

"By allocating tobacco settlement funds for Medicaid purposes, the federal government will then match state Medicaid spending on a two-to-one or three-to-one basis," he said. "While states continue to struggle with Medicaid costs, it seems a prudent investment."