Activists say multibillion-dollar tobacco settlement is being wasted

In 2006, Alaska desperately needed cash to complete a museum featuring a mummified bison and other natural wonders of the frozen north. So the state dipped into its share of the landmark 1998 tobacco settlement.

The billions that began flowing from cigarette makers to the states a decade ago also helped outfit the Niagara County, N.Y., golf course with new carts and sprinklers. And the money has gone toward college scholarships in Michigan, tax breaks in Illinois and Ohio, a dog catcher in Lincoln, Neb., and jails and schools elsewhere around the country.

Despite the promises of politicians and policymakers, states and counties have spent the lion's share of the settlement money on things that have nothing to do with public health or smoking, even as once-falling teen smoking rates have stagnated.

Of the $61.5 billion divided among 46 states between 2000 and 2006, only 30 percent was spent on health care, according to federal Government Accountability Office data analyzed by The Associated Press. Less than 4 percent went to anti-smoking efforts.

"A lot of people on both sides thought we were going to enter a new Eden, and we haven't," said Thomas Glynn, director of cancer science and trends at the American Cancer Society.

States defend the myriad ways they have spent their tobacco money, which is still being paid out in annual installments and is expected to total $294 billion over 25 years in today's dollars. They note that no strings were attached to the settlement reached on Nov. 23, 1998, and that anti-smoking campaigns do not cost billions.

"Our view was, that was money that we had to spend as a result of tobacco-related illnesses. This was paying us back for that," said Scott Pattison, executive director of the National Association of State Budget Officers.

States had sued the industry to recover the crushing costs of treating smoking-related illnesses in people enrolled in public health programs such as Medicare and Medicaid. Big Tobacco also agreed to eliminate advertising aimed at teenagers. In return, it won protection from future lawsuits.

At the time, many states intended to spend settlement money on health-care and anti-smoking campaigns.

"We should use this money to fund cancer research, offer health insurance to the poor, keep kids from smoking and arrest those who sell tobacco products to our children," said then-Pennsylvania Attorney General Mike Fisher.

But even then, lawmakers and others were eyeing the money for other needs.

Gregory Connolly, director of Massachusetts' Tobacco Control Program from 1993 to 2003, said the failure to funnel more of the money into anti-smoking campaigns was a retreat from implicit promises made at the time of the settlement.

"Every state court case had that built into it, that we're here for the kids," said Connolly, now a professor at the Harvard School of Public Health. "But the legislatures said, 'This is our money. Thanks for suing, but we're going to decide how to spend the money.'"

Over the years, about two dozen states have sold off portions of their annual tobacco-settlement payments for upfront money, sometimes for pennies on the dollar. And now, with the economy in crisis, more states are proposing to dip into their tobacco money to solve some of their problems.

Overall this fiscal year, states are expected to spend about $718 million on tobacco prevention, the Campaign for Tobacco-Free Kids estimates -- well below the $3.7 billion recommended by the government's Centers for Disease Control and Prevention.

By comparison, the tobacco industry spent $13.1 billion in 2005 on advertising and marketing, according to the most recent figures from the Federal Trade Commission.

According to the CDC, the percentage of high school students in the United States who said they smoked cigarettes grew from about 27 percent in 1991 to more than 36 percent in 1997. The figure fell to about 22 percent in 2003 but has remained essentially static since then. Use of other tobacco products is on the rise.

The drop in smoking has been attributed to a combination of higher cigarette taxes, tougher workplace and restaurant smoking bans, and anti-smoking campaigns.

"The total number of Americans who die every year from tobacco is continuing to grow in part because of the failure of the states to spend a reasonable amount of the funds they received on tobacco prevention," said Matthew Myers, president of Tobacco-Free Kids.

Major tobacco-producing states that were hard hit by the settlement received extra money under the agreement to repair the damage to their economies from the loss of tobacco-related jobs. But anti-smoking advocates have suggested many of the projects went too far astray, often bolstering the very industry the lawsuit sought to punish.

Among other things, tobacco-settlement money has been put toward a North Carolina museum on tobacco farming and a veterinary center in Kentucky for diagnosing illnesses in thoroughbreds. Some $100 million is helping make aircraft parts in Kinston, N.C. And more than $80 million is being used to bring broadband service to rural Virginia.

Karen Jackson, director of the Virginia governor's broadband office, said: "This money was to address problems of years gone by, but also to shore up a future where we have a better-educated, more well cared-for population going forward."

One yardstick for measuring how serious states have been in the fight against smoking is the CDC's recommended state-by-state spending levels. The agency's annual recommendations range from more than $440 million for California and $266 million for Texas to about $9 million each for Wyoming and North Dakota.

No state is meeting those levels, and only nine are funding tobacco prevention programs at even half the recommendations, according to the Campaign for Tobacco-Free Kids.