Tobacco settlement filling budget holes

KANSAS CITY, Mo. -- Missouri spent nearly half of the money it received from a 1998 tobacco settlement last year to cover budget shortfalls, and plans to do so again this year, according to a report by the federal Government Accountability Office.

Meanwhile, Kansas spent none of its settlement money last year on shortfalls, and doesn't plan to change that in fiscal 2005, the report said.

Last year, Missouri received nearly $145.3 million in tobacco funds, and expects to get another $144 million in fiscal 2005, which ends June 30. Almost half of the money was spent last year on health-related costs, such as Medicaid payments and prescription drug assistance for low-income senior citizens, the report said.

Another $4.4 million in tobacco money was allocated last year to Missouri's general fund, which pays for education, Medicaid and other services.

Kansas spent the largest share of its tobacco money in 2004 -- more than $32 million -- on social services, and expects to increase that to nearly $42 million in 2005, the report said. In 2004, $11 million was put into the general fund, but that number is expected to fall to about $5.1 million this year.

Nationwide, states received $9.7 billion in tobacco funds last year, spending 44 percent on budget shortfalls and 20 percent on health-related programs, the GAO said.

States have received about $47 billion in tobacco money since 2000, including proceeds from the sale of bonds backed by anticipated tobacco payments, the report said.