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Friday, Aug. 26, 2016

Tobacco settlement funds are misspent

Wednesday, April 2, 2003

Back five years ago, a landmark agreement between the tobacco companies and 46 state governments settled a long-standing lawsuit over the harm to our health from tobacco products. That agreement would send $206 billion to the states over 25 years to settle dozens of lawsuits.

I well remember the discussion at the time that these funds would be used primarily for health care and education on the health issues surrounding tobacco - primarily cigarettes. But states were given great leeway on how they used these funds. And boy have they taken that leeway to the extreme.

Missouri and a host of other states have used the tobacco bonanza to help balance declining state budgets. I can't help but wonder what we would have done without this extra cash. But regardless, Missouri is a prime example of some wasteful use of these important funds.

I was reading about a new economic development project in West Virginia - of all places - where that state used $17 million of the settlement funds to build an Institute for Advanced Learning and Research and another $1 million to fund a new 900-acre industrial park. That state also used $2 million to install 40 miles of fiber-optic cable for a new network that could attract high-tech jobs to the state.

Michigan is using some of their tobacco funds to support new industry programs and Kentucky has committed funds from the tobacco companies for agriculture diversification.

But Missouri and several other states are spending their settlement funds now. In Missouri's case, we're even selling bonds against future payments to help balance our state budget today. It's far too late now to change this spending plan but I think it's been a mistake from the very beginning.

This is not a partisan mistake. Democrats and Republicans alike have been most anxious to get their hands of these tobacco funds to help solve today's problems. But the prospect of those funds actually improving the health issues related to tobacco are out the window. There's a biblical lesson on this issue concerning just how we use our talents. In Missouri's case, we may have made a mistake that will surface years from now.

Without using the settlement fortunes, Missouri would have surely been forced to cut spending and services even deeper. But is that such a bad idea? Well the truth of the matter is we'll probably never know because the funds have been allocated and the damage done.

I can't help but foresee that some distant legislative session will cry foul that the anticipated revenues will have long been spent by then. And then, there will be a day of reckoning.

The tobacco settlement was an amazing amount of money for the states. Each state made a decision on just how and when to spend those dollars. In Missouri's case - as with many others - we took the easiest path. But it may well prove to have been the wrong road.

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