For Immediate Release
Wednesday, May 26, 1999

For Further Information,Contact:
Mark Schmidt or Jared Adams

(703) 683-5700

States Systematically Squander Tobacco Settlements, Study Shows
Blazes Clearest Paper Trail Yet On Political Relationships

(Alexandria, VA) -- State officials who once portrayed their suits against tobacco companies as attempts to "recover" money for taxpayers "injured" by smokers’ "costs" are now lining lawyers’ pockets and pumping up pork-barrelers. That’s the conclusion of the first comprehensive post-settlement survey of the state tobacco suit, released today by the non-partisan National Taxpayers Union Foundation (NTUF).

"A number of states plan to or already have set up agencies or permanent trust funds devoted solely to disbursement of tobacco funds," observed study author and NTUF Director of Programs Mark Schmidt. "Largely forgotten in the rush to fund new programs are the taxpayers, for whom the tobacco settlement appears more likely to provide bigger government rather than well-deserved tax relief."

According to Schmidt, the tobacco settlement set a number of troubling precedents and confirmed a number of suspicions that taxpayer advocates had from the outset:

Broken Promises. In announcing his state’s groundbreaking lawsuit against tobacco companies, Mississippi Attorney General Mike Moore insisted the litigation would recover money "rightfully owe[d] to Mississippi taxpayers." Other states piled on with similar claims. Yet, out of 405 bills introduced in state legislatures concerning disbursement of tobacco settlement funds, just 11 explicitly propose tax cuts or credits.

Special Interest Spending Spree. Most states seem determined to find "creative" spending schemes for their share of the tobacco loot. North Dakota’s Senate has approved a plan to spend half of its settlement on flood control. Los Angeles’s Mayor has called for using the city’s $300 million award to make sidewalks more accessible to the disabled. One proposal in Louisiana would sell the state’s  tobacco windfall like a winning lottery ticket, and then use the money for purposes such as pay hikes for teachers and more health programs.

Fishy "Foundations. Many states are proposing to place settlements in government-run "trust funds" that would dole out money to applicant interest groups. Yet, to whom will these bureaucracies be accountable? And will losers in the grant process seek general revenues for their wish lists, or worse, sue if their demands are not met?

Huge Payday for Trial Lawyers. A handful of private lawyers, who in may cases contributed to the political campaigns of the state attorneys general who appointed them, will rake in over $10 billion in legal fees. For example, in Mississippi, trial lawyers who never set foot in a courtroom will collect an astounding 35 percent of the state’s $4 billion settlement.

"Politicians waged the so-called tobacco wars in the name of taxpayers, but so far the only ones receiving any spoils are politically-connected trial lawyers and well-heeled special interests," Schmidt concluded. "Overburdened taxpayers are increasingly looking like the victims, not the victors, of these ill-advised lawsuits. Our economy and political system are sure to suffer as a result."

NTUF is the research and educational arm of the 300,000-member National Taxpayers Union. Note: Copies of Mr. Schmidt’s study are available upon request or online at


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National Taxpayers Union is a non-profit, non-partisan citizen organization working for lower taxes, less wasteful spending, taxpayer rights, and accountable government at all levels.

National Taxpayers Union Foundation is a public policy educational and research organization based in Alexandria, Virginia.  To find out more about our work, please call us at (703) 683-5700 or visit our web site ( 

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