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SALT LAKE CITY (AP) -- Citing record-low U.S. cigarette sales, tobacco manufacturers are seeking a reduction in their settlement payments to the states.
Utah is to receive an estimated $29.5 million payment next month as part of its share of the 1998 Master Settlement Agreement, and that amount appears safe from the adjustment sought by the companies.
"The things that I'm hearing right now, it looks like it's OK," said Richard Ellis, Gov. Jon Huntsman's budget director. But, he said, if the adjustment is ultimately granted, the resulting reduction in future payments "could be relatively significant."
Tobacco producers have sought the adjustment based on their market share loss in 2003. To succeed, they must convince an independent auditor that the settlement was a significant factor in that loss to producers who chose not to participate in the settlement.
According to the Utah attorney general's office, the potential national adjustment for 2003 could be as much as $1.4 billion.
The auditor issued a preliminary decision earlier this month that the agreement was significant in the companies' losses. States now have the opportunity to object before a final decision is rendered on March 27.
Payments to the states are due April 17, and the attorney general's office is optimistic the state will receive its expected amount.
"We hope and trust they will pay in full," assistant attorney general Mark Burns said.
Different states opted to receive their share of the $206 billion settlement in different ways. Some have already settled their claims while others, like Utah, will receive payments over the next 25 years.
To date, the state has received close to $200 million. Utah's share of the settlement is $836 million.
A portion of the state's annual payments go into a trust fund, and the goes to various programs, including the Children's Health Insurance Program, the Department of Health's Tobacco Prevention and Control Program and cancer research at the University of Utah.
The health department said that smoking rates among Utah adults has decreased 25 percent in the six years since the state initiated aggressive tobacco prevention programs.
"What we're looking at, if the funds were lost, is a huge loss in these programs and also a loss in cost-effectiveness to the state," said Lena Dibble, media coordinator for the Tobacco Prevention and Control Program. "This would mean a big change for us."
Sen. Lyle Hillyard, R-Logan and co-chairman of the Executive Appropriations Committee, said that if the state's smoking rate continues to decline, so might the need for programs to curb tobacco use.
(Copyright 2006 by The Associated Press. All Rights Reserved.)
