News Article
Decline in cigarette sales highlights past misuse of tobacco settlement funds in some states
From Marketplace
April 15 isn't the date most people will be paying their taxes to the government this year. It is, however, the day that the tobacco industry makes its annual payments to state governments as part of a settlement reached back in 1998. That money was meant to fund anti-smoking campaigns and public health programs, but the settlement agreements didn’t stipulate where the payments would go, leaving states to use the windfall however they want.
Many have criticized how states have utilized the money.
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But things have gotten worse for those states since then, as it turns out, because fewer people are smoking cigarettes. Sales are shrinking, and since the settlement amounts are tied to those sales, states are seeing about a 4.5 percent decrease in payments each year.
Our Take
The fact that declines in cigarette sales are leading to reduced revenues at the state level only serves to underscore the fact that many states misused their funds from the tobacco settlement in the first place. Those shortsighted states not only shortchanged their tobacco cessation and prevention efforts, but now have to pay off ill-conceived bond issuances with a shrinking revenue stream.
