INDIANAPOLIS – Indiana’s inability to collect from cigarette companies that were not part of an original legal settlement will force the state’s annual share of tobacco settlement funds to drop next year from about $131 million to $68 million.
A three-judge arbitration panel last month decided to decrease Indiana’s share by about $63 million next year because it found the state had failed to do enough to collect funds from cigarette companies that weren’t part of the original settlement in 1998, The Indianapolis Star (http://indy.st/1fFVeAZ) reported Thursday.
The money Indiana receives from that settlement is for programs that help people stop smoking and tries to prevent others from starting and for other health-care programs.
Reps. Greg Porter, D-Indianapolis, and Charlie Brown, D-Gary, said they learned about the ruling during a meeting with the Indiana attorney general’s office.
“Obviously, this will certainly harm our state’s ability to fund any number of programs designed to promote a healthy Indiana,” said Porter, the top Democrat on the House Ways and Means Committee. “Unlike other states that used tobacco settlement dollars for things like highway funding, Indiana was diligent in using these dollars on health care issues.”
The attorney general’s office said it disagrees with the ruling, saying “legal action is likely to be taken soon.”
Indiana and 45 other states signed what was called a master settlement agreement in 1998 with four of the nation’s largest cigarette manufacturers. About 40 other tobacco companies have since joined the settlement, which requires the companies to make annual payments to states.
The state attorney general’s office released a statement Thursday saying that since the first payment in April 1999, Indiana has received more than $1.9 billion in settlement payments from tobacco companies, in annual installments ranging between $125 million and $150 million. The amount the state received depended on annual sales volume from each manufacturer.
The settlement allows companies to reduce payments to states if they lose market share to those that aren’t part of the agreement. The ruling last month said Indiana, Missouri, Kentucky, Maryland, New Mexico and Pennsylvania had failed to do enough to collect from companies not part of the settlement. The ruling covers claims from payments in 2003. The state could lose even more, as payments from 2004 to 2012 are still being reviewed by the panel.
“There is a very real potential here that Indiana is facing multi-million dollar sanctions over several years, which will have a disastrous impact on many of these programs,” Porter said.