Senate Backs Allowing States to Use Tobacco Money as They See Fit

WASHINGTON — The Senate on Thursday backed governors in their fight to control the $250-billion settlement with the tobacco industry, refusing to require states to spend half the money on anti-smoking and public health programs.

The 71-29 vote makes it more likely that California will be able to use its share of the tobacco proceeds, projected to total $25 billion over the next 25 years, as its elected officials see fit. Public education is one likely priority already identified by Gov. Gray Davis.

The Senate’s resounding bipartisan vote was a significant defeat for the Clinton administration, which has claimed the right to use some of the settlement money for federal public-health initiatives--or at least to determine how it is spent by the states.

The administration’s stance “is typical federal government arrogance,” said Senate Majority Leader Trent Lott (R-Miss.). Federal officials “want the money--or if they don’t get it, they want to control it.”

The vote was also a defeat for public health groups that have lobbied heavily to ensure that the money cigarette manufacturers agreed to pay to the 50 states goes to help reduce smoking, especially among young people.

The issue was joined when the Senate defeated an amendment that Sen. Tom Harkin (D-Iowa) offered to an unrelated spending bill that would have forced states to spend 20% of their settlement money on anti-tobacco programs and 30% on public health programs or aid to tobacco farmers.

Left in place by the vote was another provision of the spending bill that would prohibit the federal government from staking any claim to tobacco settlement funds.

California’s Democratic senators parted ways on the issue: Barbara Boxer voted in favor of Harkin’s proposed federal mandate. Dianne Feinstein voted against it, at the urging of Davis.

Davis and the nation’s other governors have opposed efforts to attach federal strings to tobacco funds. Davis has indicated that he would like to use the tobacco money--California is expected to receive more than $500 million this year--for school improvements, state employee raises and a reserve fund.

Exactly how Congress ultimately will resolve the fight with Clinton over the use of tobacco funds will not be clear until the Senate negotiates the matter with the House, which has not yet addressed the issue. And Clinton may veto legislation that does not give him a say in the use of tobacco funds. But Thursday’s Senate vote was a strong endorsement of the idea that the federal government should keep its hands off the money.

The Senate action came as it continued to consider a catchall emergency spending bill that includes nearly $1 billion in disaster assistance for Central American nations hit by Hurricane Mitch.

In the argument over the tobacco settlement money, state officials assert that the revenues are theirs alone to spend because they arise from lawsuits pressed by the states, not the federal government.

The administration argues that the federal government has a legal right to some of the money because a key part of many of the state lawsuits was the recovery of Medicaid costs incurred from caring for people with smoking-related diseases. The federal government pays at least half the cost of that program, even more in many states.

Clinton, in his budget this year, counted on the federal government receiving more than $18 billion from the tobacco settlement over the next five years.

The power struggle between Clinton and the states broke out in the Senate Appropriations Committee two weeks ago when the panel added an amendment to the disaster aid bill to prohibit the federal government from claiming any of the settlement money.

During Senate floor debate on the bill Wednesday, Harkin offered his amendment with Arlen Specter (R-Pa.). It would waive the federal claim to any settlement money if a state used half of it for reducing tobacco use, public health or aid to tobacco farmers.

Amendment supporters said that it was the federal government’s right and obligation to be sure at least some of the money is used to ameliorate the smoking-related problems that gave rise to the lawsuits.

“This approach offers maximum flexibility for the states while guaranteeing that tobacco prevention efforts are funded across the country,” Harkin said.

Foes of the amendment said that states have a legal claim to the settlement money and that they are better equipped to decide how to spend it.

“If you want to tell Texas how to spend its money, quit the Senate, move to Texas . . . and run for the state Legislature,” said Sen. Phil Gramm (R-Texas).

In California, officials argue that the state is already spending substantial sums--with revenues from a state cigarette tax that became law a decade ago--on tobacco-related programs, including $83 million in Davis’ 1999-2000 budget and $33 million for research on tobacco-related disease. They argue that they should be able to use tobacco settlement funds for other state priorities.

“What we didn’t want was for California to be penalized for having taken the initiative and passed a tobacco tax for this very purpose,” a Davis advisor said.