Post Office Box 408
Peabody, Massachusetts 01960 (508) 384-0100
Friday, March 12, 1999
By being one of the first states to sue and investing so much time and money,
Massachusetts assumed a lot of risk in this case. This is a form of compensation. I'm glad
the citizens of the Commonwealth will benefit from the hard work the tobacco team
Former Attorney General L. Scott Harshbarger
News Release: March 11, 1999
Office of the Attorney General
Today we learn from the Boston Herald [story below] that Massachusetts is set to
receive an additional $359 million "bonus" from the "tobacco
The state's $7.6 billion share of the $206 billion national settlement will arrive
in $250-$350 million annual installments for the next 25 years, with an additional $323
million a year paid out every year afterward, in perpetuity. The settlement was pursued
allegedly to seek reimbursement for the cost of providing taxpayer-funded health care to
uninsured smokers with tobacco-related illnesses.
This just-announced additional bonus is specifically targeted as reimbursement to
the states for their legal expenses. ["The industry would pay all attorney fees
both state and private counsel and reimburse states for their costs." From the news
release: "Attorneys General Announce Tobacco Settlement Proposal"; Washington,
D.C., November 16, 1998]
We taxpayers funded the attorney general's lawsuit, and former AG Harshbarger has
acknowledged that the bonus is "a form of compensation" for "investing so
much time and money" in his pursuit.
Other states also have begun the debate over what to do with their reimbursement
windfall. In Michigan, the Detroit News agrees with us that the entire reimbursement
should be given back to the taxpayers who compassionately provided the funds when the
money was needed [editorial below Herald story].
Chip Ford --
The top six states receiving additional bonuses are: New York, $471,532,567;
California, $444,552,667; Washington, $394,959,031; Massachusetts, $358,636,883;
Connecticut, $284,502,080; and Maryland, $267,951,245.
The Boston Herald
Friday, March 12, 1999
Frontline Bay State gets $359M bonus from tobacco suit
by Tim Cornell
Massachusetts will get a $359 million bonus because it played a
leading role in settling the national tobacco lawsuits.
Former Attorney General Scott Harshbarger made Massachusetts the
fifth state to join in the liability lawsuit against the top cigarette makers.
If the companies had not settled, the state would have taken them to
trial last month.
Instead, the companies agreed to settle and Massachusetts won $7.6
billion, the fourth-largest award in the nation.
The money will be paid out over 25 years.
"I'm proud of the fight we waged against the tobacco
industry," Harshbarger said in a statement yesterday.
"By being one of the first states to sue and investing so much
time and money, Massachusetts assumed a lot of risk in this case."
Of the 46 states involved in the tobacco litigation, a three-member
panel decided Massachusetts was the third-largest leader in the efforts to sue the tobacco
companies and deserved the extra reward.
The $359 million is the state's share of an $8.6 billion fund created
as part of the nationwide settlement and was designed as an extra reward for states that
played a leading role in the lawsuits.
Harshbarger, now a professor at Northeastern University, called the
extra millions "a form of compensation" for the state's effort.
The Detroit News
Sunday, November 22, 1998
Up in Smoke
Tax-and-spenders are salivating at the prospect of $8.1 billion in
tobacco settlement bucks swelling the state treasury for 25 years to come. The lung lobby
can hardly wait to launch yet more anti-smoking programs.
But every penny rightfully belongs back in taxpayers' pockets by way
of a tax cut.
The windfall supposedly represents tobacco industry reimbursement for
the Medicaid costs of treating smoking-related illnesses. Of course, neither Michigan nor
any of the other money-grubbing states on the settlement list can actually account for
such costs. In fact, smokers, who tend to die early, probably save the state money.
But any excuse to raid a corporate till will do. The irony, of
course, is that Michigan owns $374 million worth of tobacco industry stock. So Michigan is
participating in a lawsuit that is obtaining damages from firms in which it is an
An additional irony is that the state collects more than $534 million
in tobacco taxes each year from firms it has sued for selling the product that yields the
The settlement has yet to be signed, but lawmakers' and lobbyists'
wish lists are at the ready. Predictably, a legion of so-called nonprofit groups already
are grumbling that there isn't enough green to go around.
Examples of other states' uses of the tobacco settlement windfall are
uninspiring. Mississippi, for example, has used its $4 billion payoff (the nation's first)
for street lights, roof repairs, video equipment and a series of formal dinners to
inculcate proper etiquette in (non-smoking) teens.
The argument will be made that Michigan should use some of the
windfall for stepped-up anti-smoking campaigns. But some $7 million is spent by the state
on smoking cessation and prevention efforts - along with hundreds of millions more
expended by the federal government.
Still, most anti-smoking programs appear to be largely ineffective,
and more money won't make them any better. While smoking among Michigan adults fell 42
percent between 1965 and 1995, the rates are now climbing right along with spending
levels. Americans in general, and teens in particular, exhibit a rather strong resentment
of government nannyism.
The settlement should be used to fund a cut in the state income tax
rate. Gov. John Engler has already proposed a five-year phased reduction of one half of a
percentage point in the rate. The settlement revenues could be used to either enlarge or
accelerate that cut. They should not be used, however, as a substitute for the
cost-cutting that would have been necessary to fund the tax cut that has already been
The state did not deserve this tobacco windfall, but Michigan
taxpayers deserve a prompt and significant tax cut. Any other use of the tobacco
settlement would simply allow it to go up in smoke.
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