If upheld on appeal, a September ruling by an arbitration panel that Kentucky has not properly enforced a portion of the 1998 Master Settlement Agreement with tobacco manufacturers could cost the state $45 million in funding from the agreement in 2014. If so, it will mean less money for state programs in agriculture, health and early childhood development.
That includes all of the money Kentucky allocates for tobacco prevention and cessation programs that are used both to help smokers kick the deadly habit and convince non-smokers to never start smoking.
Attorney General Jack Conway is appealing the September ruling. “We firmly believe that... Kentucky diligently met its obligations under the Master Settlement Agreement and disagree with the arbitration panel,” said Allison Gardner Martin, spokeswoman for Kentucky Attorney General Jack Conway’s office.
However, with $45 million in funds in limbo, state officials say they are preparing for either scenario.
“At this point we believe it’s a tossup whether the settlement agreement will be reduced and we probably won’t know the decision until much closer to March,” said Kerri Richardson, spokeswoman for Gov. Steve Beshear. “... In the meantime, we are formulating contingencies for the possible loss of those dollars.”
Half of the money Kentucky receives from the settlement goes toward agricultural programs. The other half is split evenly between public health and early childhood development.
“This is a cause for serious concern,” said Amy Barkley, regional advocacy director for the Campaign for Tobacco Free Kids. “Kentucky spends only about $2 million on tobacco prevention and cessation. ... That money comes from the tobacco settlement.”
A total of about $93 million in tobacco settlement payments is included in the state’s 2013-14 fiscal year budget.
“Tobacco settlement money is scattered all over the health-care area,” said Rep. Jimmie Lee, who chairs a budget subcommittee dealing with health programs. “So, of course, any reduction of tobacco funds would be significant.”
Of course, a number of groups including the American Heart Association and the American Lung Association already have joined the Campaign for Tobacco Free Kids and others in calling for an increase in the state cigarette tobacco tax from 60 cents to $1 a pack, but that proposal has not gotten far in the Kentucky General Assembly during recent legislative sessions. If the ruling by the arbitration panel is upheld on appeal, it could significantly increase support for a hike in the cigarette tax for programs impacted by the decision. However, we find it difficult to believe legislators will increase taxes before the 2015 gubernatorial race.
Our hope is the panel’s ruling will be overturned, and Kentucky, which has the highest rate of smoking in the nation, will not lose its share of the historic tobacco settlement. Money aimed at reducing the rate of smoking is critical in this state where tobacco was once king.