More States Using Tobacco Money to Patch Budget Gaps

Florida’s plan to raid a tobacco endowment fund to plug state budgetary gaps is the most recent example of money from the nationwide tobacco settlement being used by states for non health-related purposes, the New York Times reported Jan. 13.

Experts say the current recession puts settlement funds at even greater risk, and that states will likely become even more reliant on tobacco money for bottom-line expenditures as they look to tobacco taxes to boost their budgets.

The National Conference of State Legislatures reports that at least 17 states have sold bonds and spent money based on future tobacco settlement payouts before ever receiving the money. A 2007 report from the Government Accountability Office found that just one-third of tobacco settlement money paid out nationally from 2000 to 2005 was designated for health care or tobacco control.

In Florida, the Chiles Endowment – named for former governor and state senator Lawton Chiles, who pushed Florida to settle its cigarette case for $11.3 billion one year before the 1998 master settlement – is being eyed by current governor Charles Crist as a way to bolster Florida’s weakened financial situation. “I’d rather not to have to use it,” the governor said. “That money will be repaid; I think that’s an important point to make.”

The Chiles family would consider a lawsuit should the state decide to tap the endowment fund, which is earmarked for children’s healthcare programs. “We’re near the bottom in all these indicators of children’s health, and we’re one of the largest, wealthiest states,” said Lawton Chiles III, son of the former governor. “It’s part of a pattern: ’Let’s patch this up and get out of town before the chickens come home to roost.’”

If Florida lawmakers pass the proposed economic plan, $700 million would be taken from the endowment in June.