The press and the Governor have been critical of the General Assembly recently because we did not pass legislation this session proposed by the Governor and special interest groups.
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by State Rep. David Klindt
The press and the Governor have been critical of the General Assembly recently because we did not pass legislation this session proposed by the Governor and special interest groups. This would have dictated how the money from the tobacco settlement would be spent for the next 25 years. It was not vital to the state or taxpayers to pass legislation this year for several reasons.
Missouri signed its settlement agreement with the tobacco companies at the end of 1998. However, before the settlement becomes final, under the terms of the agreement, the Missouri Supreme Court must approve the agreement by December 31, 2001. That has not yet happened, because outside parties have filed another lawsuit claiming that they are entitled to some of the money.
The City of St. Louis, the Alexian Brothers Hospital in St. Louis, private taxpayers, and a group of smokers have joined together in this latest lawsuit. The smokers and taxpayers contend that they are entitled to some of the money since they are the ones who are actually funding the settlement through their purchase of cigarettes. These groups believe that if the state is allowed to finally settle the lawsuit against the tobacco companies, they will be foreclosed from suing the tobacco companies on their own and they will continue to be uncompensated.
This latest lawsuit is currently pending before the Missouri Supreme Court. The court will decide whether or not these private entities have the right to intervene in the state’s lawsuit. If the Supreme Court finds that these private entities can intervene in the state’s lawsuit, then the state will either have to reach some kind of monetary agreement with these parties or go back to a lower court and try to convince a judge and jury that they aren’t entitled to the money. This could take several months.
Also, the Supreme Court does not usually meet during the summer. So it is likely that the court will not even hear this case before late August or September at the earliest. If the court rules that these private entities are not entitled to intervene in the case, the court will probably not issue its ruling before the end of this year. To further complicate the issue, five of the seven Supreme Court judges recused themselves from hearing the case and now five new judges must be temporarily appointed to fill their slots. As you can see, the state is still a long way from actually receiving any of the money from the Master Settlement Agreement.
The total amount of money Missouri will receive from the lawsuit is uncertain because it is based on the amount of cigarettes that are purchased. If cigarette sales decline in Missouri, the state will receive less settlement money from tobacco companies. In fact, the original estimates of $6.7 billion over the next 25 years, or approximately $245 million per year, have been revised and are now much less than the original estimates. The tobacco companies have made two payments to Missouri which total $188 million. This money is being held in an escrow account, which draws interest, awaiting final approval from the court on the agreement.
The Master Settlement Agreement has absolutely no restrictions on how this money can be spent. Until the lawsuits are finally settled and the all the smoke clears, we do not know when we will receive this money or even how much money the state will receive. With all the uncertainty surrounding this issue, it certainly was not urgent to ask voters to amend the Constitution this year to lock in the expenditure of these uncertain revenues.