As the Vermont Legislature prepares to chip away at a $70 million budget gap, tobacco use prevention advocates are asking that lawmakers stop raiding the tobacco settlement fund.
The settlement fund is the result of a 1998 settlement between four tobacco companies and 46 states, Washington, D.C., and five U.S. territories. Vermont will receive a total of $962 million over the course of 25 years, which includes $156 million in “strategic contribution payments.”
The money is not just for tobacco prevention and the state has used a large share of it to fund Medicaid, a federal and state funded low-income health insurance program.
With Medicaid costs rising and the settlement payments set to taper in 2017, tobacco prevention funds are set to dry up, said Tina Zuk, government relations director for Vermont chapter of the American Heart Association/American Stroke Association.
“If it just disappears, the program is in grave danger, because I don’t know where we could turn to for more money,” Zuk said.
The settlement provided Vermont with about $34 million for 2014, but appropriations to health-related programs, some of which include tobacco prevention programs, left a roughly $7,000 charge on the state’s Tobacco Trust Fund, according to the latest Joint Fiscal Office reports.
“Every year, the Legislature over appropriates from the master settlement,” said Rebecca Ryan, director of health education and public policy for the Vermont American Lung Association of the Northeast. “Nobody expected this [Tobacco Trust Fund] to be tapped into so soon and so often.”
Campaign for Tobacco-Free Kids, a national coalition focused on tobacco use prevention, is urging lawmakers in Vermont to review these settlement appropriations and to not empty the Tobacco Trust Fund.
“It is going to put a huge strain on tobacco control programs in the state,” Ryan said. “What other sources do we have?”
Vermont will receive an estimated $113 million this year from the 1998 settlement and the state’s Tobacco Trust Fund investments.
However, the state will spend only about 4 percent of these funds, or about $3.9 million, on tobacco prevention programs, which include the Department of Health’s cessation and nicotine replacement programs as well as media campaigns targeting Vermont youth.
According to a tobacco use poll by the Campaign for Tobacco-Free Kids, about 13 percent of Vermont’s high school students smoke, as compared with 18 percent nationally.
RECOMMENDED REVENUE SOURCES
The group recommends the state place 10 percent of its revenue from its tobacco tax into the trust fund. Currently, none of the state’s tobacco tax goes into this fund, Zuk said.
Zuk said increasing the state’s tobacco tax by about $1 would be a good way to prevent people from purchasing tobacco products and provide revenue for the fund. However, such a tax is unlikely to gain traction this year, she said, especially given Gov. Peter Shumlin’s commitment to no new taxes.
While a tax increase might be unlikely, the group recommends going after settlement fees previously withheld by the tobacco companies. To date, tobacco companies have withheld at least $10 million, which is permitted under a settlement clause to prevent the companies from a competitive disadvantage with those not involved in the lawsuit.
THE REPORT
Campaign for Tobacco-Free Kids recently released a report that shows Vermont falling short of the Centers for Disease Control and Prevention’s recommended funding for tobacco prevention programs.
The annual report on states’ funding of tobacco prevention programs is titled “A Broken Promise to Our Children: The 1998 State Tobacco Settlement 15 Years Later.” The report was released by the Campaign for Tobacco-Free Kids, American Heart Association, American Cancer Society Cancer Action Network, American Lung Association, the Robert Wood Johnson Foundation and Americans for Nonsmokers’ Rights.
In the report, the Centers for Disease Control and Prevention recommends spending more than $10 million on tobacco prevention programs in Vermont. However, Zuk said $5 million is an adequate amount.
North Dakota sits atop of the group’s list, spending 102 percent of their recommendation on prevention. New Jersey is at the bottom of the list, spending nothing on prevention, though the state’s high school smoking rate exceeds Vermont’s by only 3 percent.
Zuk said New Jersey is probably successful because of its $2.70 tax on tobacco, which exceeds Vermont’s tax at $2.62, according to a report by the Campaign for Tobacco-Free Kids.
“A really high price of tobacco is the best way for kids not to smoke,” Zuk said.
