Mo. slated to lose half of tobacco settlement funds

Everyone knows smoking can have negative consequences for one’s health. Now, Missouri lawmakers know that not enforcing the terms of an agreement can have a negative impact on the state’s bottom line.

When Missouri receives its annual settlement checks in April from tobacco companies, the state will be missing $69 million from its typical $130 million in payments. The reason? An arbitration panel concluded state officials in 2003 failed to fully enforce terms of the 48-state tobacco settlement, according to the Kansas City Star.

The settlement called on companies that weren’t part of the agreement to put money into escrow accounts that are supposed to cover the costs of any potential state lawsuits against them. However, the arbiters found that in 2003 those non-participating companies only deposited 24 percent of the escrow funds they were supposed to fork over to states.  

That means, this year’s settlement dollars could be the first of many to be lower than expected as the arbitration panel has yet to review the state’s enforcement efforts in 2004, 2005 and beyond. Under the settlement, major tobacco manufacturers can reduce payments to states if they suffer a loss in their market share and states didn’t enforce provisions designed to keep smaller companies not included in the agreement from gaining sales.

Read more from the Kansas City Star.