States are slated to get less money from the tobacco settlement than initially thought, because of an expected nationwide decrease in cigarette shipments.
Under a little-noticed "volume adjustment" provision of the settlement, Connecticut stands to receive up to 10 percent less than the $166 million it expected to collect between now and April, said Marc Ryan, the director of the governor's budget office.
Other states also stand to come out with less money as tobacco shipments and sales decline because of high price increases and anti-tobacco campaigns that started after cigarette makers settled lawsuits with the states last year.
The exact reduction has not yet been calculated. It will affect settlement payments due to states in April.
The situation puts some state budget-crunchers in limbo as they plan to spend money they do not yet have on things from education and health care to new roads and prisons.
"Frankly, the prudent thing to do is not to spend specific dollars until they see what they will be," said Laurie Loveland, a lawyer who helped negotiate the tobacco settlement for the North Dakota attorney general's office. "I think it's a mistake for state legislatures to become addicted to the tobacco money."
Tobacco companies agreed to pay around $206 billion over 25 years to settle lawsuits against them by Connecticut and 45 other states over the costs states incurred to treat sick smokers.
Tobacco opponents said the decreased payout underscores the need for more of the settlement money to be spent directly on health care and anti-smoking campaigns instead of other state needs.
Altogether, Connecticut will get about $153 million this fiscal year, including $45 million expected to arrive in the next few weeks, Ryan said.
Starting with the April installment, payments will be adjusted according to the number of cigarettes shipped in the United States in 1998 and 1999, Loveland said.
For every full percentage point the shipments decrease, the payments will go down 0.98 percent, she said.
Price increases and marketing restrictions have meant an 8.6 percent reduction in the number of cigarettes sold this year, the U.S. Department of Agriculture's Economic Research Service has estimated. Last year, sales were down about 3 percent.