JEFFERSON CITY, Mo. – Following Democratic Gov. Jay Nixon’s criticism of the Republican-controlled legislature over its Fiscal Year 2014 supplemental budget, Senate President Pro Tem Tom Dempsey shot back critical of him over his handling of the tobacco master settlement while he was Attorney General.
“Had, as Attorney General, he diligently enforced the master settlement, we’d have an additional $70 million in this year’s budget,” Dempsey told reporters Monday night. “This public posturing is, I don’t think, productive.”
Missouri has taken a loss on payments from the tobacco master settlement due to failure to “diligently enforce” collection of escrow funds from so-called Little Tobacco companies (the smaller companies not included in the master settlement agreement) since the settlement was agreed to in 1998. Missouri’s collection rate was 24 percent in 2003, the lowest among 15 states involved in arbitration.
The escrow fund is something that the state can use to fund lawsuits against smaller tobacco company (known as “non-participating manufacturers,” as a way to essentially level the playing field between them and Big Tobacco companies that are on the hook for millions in payments to states each year). Annually, small tobacco companies have collected some $80 million back from the escrow account, according to Attorney General Chris Koster.
Koster, like Nixon did while serving as Attorney General, has called for elimination of a clause built into law that allows those escrow funds to be returned. Without elimination, Missouri could lose $130 million in payments from the settlement later this year from the tobacco settlement. Legislation is pending that would attempt to require Little Tobacco to pay the same amount per-cigarette as Big Tobacco and would significantly reduce the amount of payments that could be refunded from the escrow fund.
Last month, Dempsey penned a letter to Koster, a Democrat, seeking information about his handling of the master settlement agreement. He raised eight questions, many of which came up in a Pennsylvania lawsuit in which the state recouped some $120 million in tobacco-settlement funds. The state’s lawsuit questioned whether the arbitration panel adequately defined “diligence,” and noted many ways in which it had enforced the suit.
Dempsey’s letter to Koster asked what and how many resources had been allocated to enforcement, what changes had been made to modification of data, how many lawsuits were filed, and what the collection rate was between 2004 and 2012.
Koster has yet to respond to Dempsey’s letter and has asked for more time to respond. Dempsey wrote that he has “great reluctance” to move the bill forward without a response from Koster’s office.
“This issue is of great concern to policymakers here in Missouri. If SB 820 is to come before the full Senate for debate, we will be asked to take a position which could substantially impact our state’s budget,” he said. “In order to make an informed decision, it is imperative that senators be provided all relevant information.”
Koster’s office was not responsive to an inquiry regarding Dempsey’s letter.