Mo. receives $156M payment from tobacco settlement

Saturday, May 2, 2009

JEFFERSON CITY, Mo. -- Missouri has received a $156 million payment as part of a nationwide settlement with tobacco companies, raising its total share to $1.5 billion so far.

But there are legal questions both about the way Missouri is spending its settlement proceeds and whether it can continue to receive the annual payments.

Missouri was one of 46 states that joined the 1998 tobacco settlement intended to cover government costs of providing health care to people who have become sick because of tobacco use.

But many states, including Missouri, have plugged that money into other parts of their budgets. That has prompted a lawsuit, pending before a Missouri appeals court, that seeks to force legislators to spend a greater amount of the settlement funds on life science research.

There also is concern that Missouri could lose some of tobacco settlement money.

States that accepted the tobacco settlement also approved new laws to implement the agreement. One of those provisions set up an escrow fund and required tobacco companies that didn't join the settlement to pay into it to cover any future lawsuit judgments. The money from the escrow accounts would be returned after 25 years.

Missouri is facing national arbitration over whether it has diligently enforced its laws, and the attorney general's office anticipates similar challenges annually.

Attorney General Chris Koster said that unlike every other state, Missouri has not passed additional laws to help enforce the escrow.

"The potential exists that Missouri could lose its share of tobacco-settlement dollars if the national panel finds that Missouri failed to diligently enforce its laws," Koster said in a written statement. "If this were to occur, it would be one of the greatest wastes of public resources in recent history."

A lawsuit challenging how Missouri uses the tobacco settlement money it does receive was filed in 2007 by Kansas City residents Thomas and Margaret Redmond. They contend lawmakers have shortchanged a state life sciences research fund that receives money from the tobacco settlement.

A 2003 law set up the Life Sciences Research Trust Fund, which was to use 25 percent of the annual tobacco settlement payment to award research grants. But lawmakers have balked, sometimes budgeting none of the tobacco settlement money and sometimes only a portion of the 25 percent.

Thomas Redmond, who has melanoma, and Margaret Redmond, who has peripheral neuropathy, argue that they could benefit from the research that would have been funded from the trust fund.

Dick Miller, the Redmonds' attorney, said Friday it was clear that part of the tobacco settlement must go to life science research -- even if lawmakers don't include it the state budget.

"The state has already taken over $200 million which under the statute was mandatorily required to be used for medical research," Miller said. "This money that the state has taken is trust fund money, and by taking this money, the state has violated that trust."

Miller also is representing the Kansas City Symphony, which contends lawmakers have not followed a state law requiring that the arts be supported by a portion of the taxes levied upon athletes and entertainers who travel to Missouri.

Miller is appealing both cases after Cole County Judge Richard Callahan ruled that lawmakers have a constitutional authority to appropriate state funds and that a state law earmarking money for certain purposes can therefore be ignored.

Miller argued, during a hearing last summer over both the symphony and tobacco settlement cases, that lawmakers wouldn't be accountable to anyone if the courts rule that statutory spending requirements do not bind their budgetary decisions.

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