IBJNews

Lawmakers confused by cut in state’s tobacco funds

Back to TopCommentsE-mailPrintBookmark and Share

A hearing about tobacco funding Wednesday in the House Public Health Committee left many legislators still searching for answers.

The meeting addressed the ongoing legal battle between the state and tobacco companies.

The lawsuit stems from an agreement in 1998 – called the Tobacco Master Settlement – that says tobacco companies have to make payments to Indiana and other states. These payments are meant to help defer the health care costs caused by tobacco products.

Forty-six states, including Indiana, signed what was called a master settlement agreement with four of the largest cigarette manufacturers in the United States. The companies agreed to pay the states roughly $206 billion over 25 years to settle claims regarding smoking-related health care costs and youth smoking.

Since then, another 40 or so tobacco companies have joined the settlement, which requires the companies to make annual payments to states.

The payments vary by state, manufacturer and year, but they are primarily based on the number of cigarettes sold.The settlement allows companies to reduce the amount they pay to states if they’ve lost market share to cigarette manufacturers that aren’t part of the master agreement. States were to be exempt from the cuts if they enacted – and enforced – laws that imposed obligations on any non-participating companies that sold cigarettes within their borders.

An arbitration panel ruled in September that Indiana and five other states had failed to undertake “diligent enforcement” to collect those payments and, therefore, the participating tobacco companies could reduce what they paid to the states.

For Indiana, that means the 2014 tobacco settlement payment would fall from $131 million to $68 million. And there’s the potential for the state to lose even more. The ruling addressed only claims from payments in 2003; the years 2004 through 2012 remain in dispute.

In an appeal, the state said the panel unfairly judged Indiana by using a new legal definition created after the fact and imposed retroactively. It said the panel based its ruling on erroneous findings and disregarded Indiana laws.

Larry Hopkins, chief administer officer at the Indiana General Attorney’s office, addressed the “complex, complicated and very dry issue” of the appeal Indiana is making against the arbitration ruling.

Kristin Adams of the Indiana State Department of Health, told the committee that $59 million of the department’s budget comes from the money that could be lost from the payments that come from the Tobacco Master Settlement.

These programs include community health centers that 500,000 Hoosiers use, HIV programs, children’s services, cancer education, and general health education. This money also goes toward local departments of health.

“Hoosiers lives are impacted by this,” Adams said. “We are all represented by a local health department, so we are all affected.”

Money from federal grants could also be affected because these grants are money matched to what the state spends.

Legislators had many questions, including, most prominently, why Indiana was ruled to be “not diligent” while other states were. But officials said they couldn’t really answer.

The meeting ended with more questions and confusion as to what this appeal and future litigation means for the state.

ADVERTISEMENT

  • Governor's Priorities?
    It seems that the problem would start with a question of the Governor's priorities. Since the program did not have much to do with eliminating another tax, it got little attention.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I am also a "vet" of several Cirque shows and this one left me flat. It didn't have the amount of acrobatic stunts as the others that I have seen. I am still glad that I went to it and look forward to the next one but I put Varekai as my least favorite.

  2. Looking at the two companies - in spite of their relative size to one another -- Ricker's image is (by all accounts) pretty solid and reputable. Their locations are clean, employees are friendly and the products they offer are reasonably priced. By contrast, BP locations are all over the place and their reputation is poor, especially when you consider this is the same "company" whose disastrous oil spill and their response was nothing short of irresponsible should tell you a lot. The fact you also have people who are experienced in franchising saying their system/strategy is flawed is a good indication that another "spill" has occurred and it's the AM-PM/Ricker's customers/company that are having to deal with it.

  3. Daniel Lilly - Glad to hear about your points and miles. Enjoy Wisconsin and Illinois. You don't care one whit about financial discipline, which is why you will blast the "GOP". Classic liberalism.

  4. Isn't the real reason the terrain? The planners under-estimated the undulating terrain, sink holes, karst features, etc. This portion of the route was flawed from the beginning.

  5. You thought no Indy was bad, how's no fans working out for you? THe IRl No direct competition and still no fans. Hey George Family, spend another billion dollars, that will fix it.

ADVERTISEMENT