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Plans for Tobacco Settlement Funds Differ

April 14, 1998
By: Brent P. Johnson
State Capital Bureau

JEFFERSON CITY - As the U.S. Senate continues debating legislation to wrest $506 billion from tobacco companies over the next 25 years, Missouri legislators are hardly short of breath on how to use any funds the state receives from a settlement.

Attorney General Jay Nixon's office intends to keep open its own case against the companies. "Because we don't have a lot of confidence in Congress to pass a settlement, we're continuing to pursue our lawsuit here in state court," said spokesperson Scott Holste.

The case, currently pending in St. Louis circuit court, seeks to recover damages for Medicaid costs and other health care services provided by the state for tobacco-related illnesses. It asserts tobacco companies violated Missouri's consumer laws by deceiving the public on the addictiveness of nicotine and marketing to minors, Holste said.

Although it is unclear when and if the state will receive money, legislators have begun discussing how to use it. With six weeks left in the session, however, the legislation is not likely to pass. Instead, a foundation is being laid for future debate.

In the Senate, two different constitutional amendments have been proposed, which would require voter approval.

Sen. Jim Mathewson, D-Sedalia, sponsored a resolution that would avoid settlement money coming directly from the tobacco companies from falling under the Hancock revenue limit in the constitution, which caps the yearly amount of taxes the state may collect and requires any excess to be refunded to taxpayers.

Mathewson's resolution would exempt the funds from the Hancock cap and allocate it "for health purposes."

"It's a potentially huge amount of money, ungodly," Mathewson said, stubbing out a lit cigarette. "It seems silly to have the money and not use it for health care provisions."

A resolution sponsored by Sen. Peter Kinder, R-Cape Girardeau, would consider any settlement money obtained by the state as an excess of the Hancock cap. "If we're going to have $120-$125 million a year for the next 20 years, we can afford to rebate it to taxpayers. Period. We shouldn't be spending it," Kinder said.

In the House, three bills target the allocation of any settlement funds, though none of them has passed out of the committee.

Rep. Gracia Backer, D-New Bloomfield and the House majority leader, sponsored a bill that would finance tax credits for parents paying for child care services.

"I think day care is a portion of health care," Backer said. "It's important that children are in safe settings." Backer said there's already a shortage of slots for child care services, especially in rural areas, and demand will likely rise as more parents move off the welfare rolls.

Rep. Pat Kelley, R-Lee's Summit, sponsored a bill that would establish a trust fund and use its annual interest to finance health insurance for Medicaid-ineligible children up to 300 percent of the poverty level.

In March a bill passed the Senate that would utilize $51.6 million of federal allocations for uninsured, low-income children. Kelley's bill would cover the state's matching funds requirement with the windfall from a tobacco settlement.

"We took two topics generating a lot of conversation: Medicaid for children and the tobacco tax. We ought to use the money to provide long-term care."

Kelley stressed the sustainability of a trust fund. "One of our concerns is that every time you start a Medicare program, it grows and grows. Someday you're going to have a day of reckoning," he said. "It's like money falling from heaven, a windfall for us. We ought to put it in the bank."

Rep. Scott Lakin, D-Kansas City, sponsored a bill that would require 50 percent of tobacco settlement money be applied also to expanding children's access to health care. "With any settlement money, health care ought to take priority. We continue to have a rising uninsured population in Missouri."

Lakin said he doesn't want any of the money left unused. "We don't know how much money will come down, but I have a hunch that it will be a lot more than a tax credit would absorb."

Lakin admitted the bills likely will not near passage this session. "I think we'll have a debate, but we're probably a year or two early."

"I'd like to see it begin as a conversation," Backer said.

Similar sounds came from the Senate. "We began a discussion this year," Kinder said.

Mathewson agreed. "It's a work in progress. And it's complicated as hell."