State receives its annual Tobacco Settlement payment
DES MOINES — The state of Iowa recently received a payment of nearly 53 million dollars from the tobacco companies involved in the 1998 settlement agreement.
The spokesman for Iowa’s Attorney General, Lynn Hicks, says the payments are made every April. “We’re up now to $1.36 billion that has come into the state as a result of the settlement with the tobacco companies,” Hicks says.
The state sold bonds based on the settlement to get money up front and uses the payments each year to pay bondholders. Hicks says that’s what will happen this year. “The bulk of this — about 78% — goes to those bondholders who bought the bonds issued by the Tobacco Settlement authority…the rest, including $11.6 million this year, goes into the state’s general fund. So it’s up to the legislature and the governor as to how that money will be spent,” according to Hicks.
He says they worked with the State Treasurer recently to refinance the bonds. “So as a result the state is going to save some money. About $176 million over the life of the bonds,” Hicks says.
The settlement also created restrictions on the advertising, marketing, and promotion of cigarettes, including a ban on targeting children through advertising. Hicks says those efforts to cut smoking have had success. He says 24% of U.S. adults smoked at the time of the settlement, and we are now down to around 14%.
Iowa and 45 other states were part of the settlement, and Hicks says the state will continue getting payments as long as the tobacco companies continue selling cigarettes.