Utah's tobacco addiction

The madness of the 1998 Master Settlement Agreement between the states and Big Tobacco was that payouts depended upon people continuing to smoke. Never mind that the states' lawsuit against tobacco companies sought to end deceitful advertising practices and the marketing of tobacco products to children.

Utah's share of the settlement is $836 million, with about $200 million paid to date. The rest will come over the next 25 years. That is, unless the tobacco industry can convince an independent auditor that downward adjustments to the settlement are necessary given the record-low cigarette sales in the United States. The companies must establish that their participation in the settlement agreement was a "significant" factor in their sales decline in comparison to other producers who did not participate in the settlement.

Fewer people smoking is obviously good news. But using that as a rationale to reduce payments to the states is somewhat disingenuous since tobacco companies obviously have been girding for the day that fewer Americans would take up the smoking habit. Many have diversified their holdings to hedge against falling cigarette sales. They've exploited international markets.

Meanwhile, the states, Utah included, have grown accustomed to the settlement funds. In fact, Utah expects to receive an estimated $29.5 million payment next month. Said Richard Ellis, Gov. Jon Huntsman Jr.'s budget director, in a recent Deseret Morning News report, "We've become addicted to tobacco money."

It's a nasty addiction, considering that it's dirty money — it depends on people continuing to smoke — and there is now a question as to whether the full amount will be delivered to the states. Utah could weather somewhat of an adjustment given that tobacco prevention programs may have reduced smoking in Utah by 25 percent over the past six years. However, the state is still bearing a considerable portion of the health-care costs of longtime smokers.

The MSA is no golden goose, and the state should carefully consider its options if a downward adjustment in the settlement agreement is awarded. For obvious reasons, the state wants to be able to fund prevention programs, the Children's Health Insurance Program, the trust fund formed when the settlement was reached as well as cancer research at the University of Utah. But it should also establish a contingency plan should the tobacco settlement slowly extinguish.