Tobacco Settlement: States' Allocations of Fiscal Year 2005 and Expected Fiscal Year 2006 Payments

摘要

The 46 states that are party to the MSA reported receiving about $5.8 billion in fiscal year 2005 and expect to receive about $5.4 billion in fiscal year 2006. Over the previous 5 years, on average, states received $9.3 billion annually. The recent decrease in tobacco settlement funds provided to states has occurred because securitized proceeds-payments states obtained from the sale of bonds backed by future MSA payments-have declined. Proceeds declined because only one state (Virginia) chose to issue a bond and receive proceeds in fiscal year 2005, and the two states (California and New York) with the largest payments issued bonds in prior years. In fiscal year 2006, states reported that all of the tobacco settlement funds they expect to receive will be payments from tobacco companies, and none from securitized proceeds. The MSA allows states to use their tobacco settlement payments for any purpose. States reported that they used the largest portion of the fiscal year 2005 payments and proceeds (32 percent) to fund health-related programs and the next largest portion (24 percent) to fund debt service on securitized proceeds. States expect health programs to account for the same proportion of funds in fiscal year 2006, while they expect debt service to increase to 29 percent.