State Tobacco Payments Lowered

HARRISBURG, Pa. (AP) â€” The most recent payments to 16 of the 46 states that settled lawsuits with the tobacco industry were cut by a total of almost $200 million. <br><br>Officials in some of the states

Wednesday, January 10th 2001, 12:00 am

By: News On 6

HARRISBURG, Pa. (AP) â€” The most recent payments to 16 of the 46 states that settled lawsuits with the tobacco industry were cut by a total of almost $200 million.

Officials in some of the states say they already are planning measures to obtain the money, which was set aside in escrow.

The payments were cut because those states and five American territories failed to pass a law, required by the settlement, that is designed to protect the tobacco companies from losing too much market share to other manufacturers.

The industry feared that the nonparticipating manufacturers might gain an advantage because they would not be restricted by the settlement's ban on billboard advertising and other marketing tactics, such as cartoon images like Joe Camel.

In all, the tobacco industry withheld $197 million from last month's biannual payment. California's December payment was $44 million less than it expected. Pennsylvania's was $19 million lower. Delaware took a hit of $900,000.

``We are dealing with such enormous figures here, that what appears to be a fairly small shift ends up being a relatively big adjustment,'' said lawyer Sue Ellen Wooldridge, who represents the National Association of Attorneys General. The group is working with states to get the money back.

Previous settlement payments from the tobacco industry to the states â€” expected to total about $206 billion over the next 25 years â€” have been lower than projected due to declines in the volume of cigarettes shipped, slower sales and inflation.

Payment amounts are determined by an independent auditor, not by the industry, said Tom Ryan, a spokesman for Philip Morris U.S.A.

Under the settlement, withheld money will remain in escrow until an independent market analyst determines how much, if any, market share the industry has lost, according to attorneys for the attorney generals' association. It was unclear how long that might take, they said.

Some states, including Pennsylvania, are considering litigation challenging whether any market share was lost.

``We're confident we'll prevail,'' said Sean Connolly, a spokesman for the Pennsylvania attorney general.

The other affected states, according to the National Association of Attorneys General, are Alabama, Arizona, Connecticut, Hawaii, Kentucky, Massachusetts, Michigan, New York, North Carolina, Oregon, Pennsylvania, Vermont, Wisconsin and Wyoming.

The American territories are American Samoa, Guam, Northern Mariana Islands, Puerto Rico and the U.S. Virgin Islands.

Four states â€” Mississippi, Florida, Texas and Minnesota â€” signed separate deals with the tobacco industry for a combined $40 billion, and are unaffected by the so-called model act provision.