Tobacco money redirected

No one says the $200 million in tobacco settlement funds already spent by the state of Utah has been wasted. After all, the money went into such valuable programs as a child health insurance program.

Still, legislative leaders are saddened that more of the cash hasn't been set aside in a trust fund, where the fund's interest could be helping Utahns for all time.

"I don't feel good about this," veteran state Sen. Lyle Hillyard, R-Logan, said after the Executive Appropriations Committee on Tuesday heard what some saw as a troubled report on Utah's tobacco trust fund.

A decade ago, 46 states settled with major tobacco companies in a huge lawsuit over the cost that states were bearing over smoking-related illnesses.

The tobacco companies' payments to states are complicated. Since fiscal year 2000, Utah's yearly payments have hovered around $27 million.

As Hillyard, the Senate's budget chairman, pointed out, from the $230.2 million the state has received, only $31.9 million has been put into the state's tobacco trust fund — from which only the interest should be spent.

The other $200 million went to ongoing programs, so it is gone.

In the early 2000s, as the state faced a collective $700 million shortfall in tax revenue due to a lackluster economy, legislators actually took $30 million from the trust fund just to keep the state out of the red.

And each year, the state has spent $10 million (growing to $12 million by fiscal year 2008) on the CHIP program. CHIP is a federal program ($1 in state revenue brings in $6 in federal dollars) that provides health insurance for the children of the working poor who are not on state welfare.

Over the 25 years of the tobacco master settlement agreement (MSA), Utah's share of the $206 billion settlement should be around $836 million — a nice pot of money had the state saved all of the tobacco firms' payments.

But lawmakers didn't do that.

Each year, around $23 million is already spoken for in ongoing health-related programs, including payments to CHIP, drug courts, tobacco prevention programs, the Attorney General's Office and the Huntsman Cancer Institute at the University of Utah.

The cancer hospital is part of a nonprofit charity whose foundation Gov. Jon Huntsman Jr. once headed on behalf of his philanthropist father, who set up the U.'s cancer research center and hospital.