NCPA - National Center for Policy Analysis

Tobacco-Settlement Money Strays to Other Purposes Among The States

July 26, 2002

The $246 billion, 25-year tobacco-settlement deal did not dictate to the states where the money must be spent. But the 46 states that sued did so on the pretext that the money would be used to care for sick smokers and fund anti-smoking campaigns.

Most states are directing the funds to all manner of spending programs unrelated to tobacco. California, for example, is using some of its windfall to fix sidewalks.

  • A coalition of anti-smoking groups claims at least 15 states and the District of Columbia have sold all or part of their future settlement payments in exchange for a much-diminished lump sum.
  • Many states are re-directing the money into state budgets to cover deficits.
  • Only 16 are using substantial shares of their settlement money to fund smoking-prevention programs.
  • The states' combined deficits are expected to hit $58 billion in the next fiscal year.

Critics say the real surprise is that anyone believed state officials and politicians when they promised they would use the money for smoking-related programs.

Source: Editorial, "Burning Money," Investor's Business Daily, July 26, 2002.


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