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$3.9 Billion At Stake In Tobacco Payoff Settlement Still Has To Be Ok’d, But Mouths Are Watering Over Prospects For State Coffers

Associated Press

The state of Washington’s chunk of the tobacco industry’s proposed national settlement would rank as the largest lawsuit victory in state history.

Between $3.3 billion and $3.9 billion could be paid to Washington state over 25 years, the Seattle Times reported Friday.

The potential windfall would amount to $131 million to $155 million a year for the next 25 years - more than the state’s annual income from the lottery, the Times said.

The tobacco companies’ proposed settlement of 40 state lawsuits still needs approval from Congress and President Clinton. The firms agreed in June to pay $368 billion to compensate all states for Medicaid costs to care for sick smokers. The firms also agreed to curb advertising.

In return, they would receive protection from smokers’ lawsuits and gain restrictions on how heavily the FDA can regulate nicotine.

The White House is expected to suggest changes in the proposal next month.

New estimates of Washington state’s share emerged this week in talks with attorneys general from other states, said the state’s senior counsel Jon Ferguson. The negotiations focused on how to divide the settlement.

“At some point it gets so big it almost doesn’t compute anymore,” said Ferguson, who represented state Attorney General Christine Gregoire at the talks. Gregoire was lead negotiator for the states on regulatory provisions during negotiations with the tobacco firms.

Such a large influx of cash would spark intense interest from legislators, special interests and Gov. Gary Locke over the question of how to spend it.

Locke is leaning toward asking the Legislature to apply the money toward health care spending, said Duane Thurman, a budget analyst reviewing the settlement for the governor.

“It could free up funds for a variety of things, such as education or to broaden the reach of the state’s basic health plan,” Thurman said.

The state has spent about $5 million so far pursuing the lawsuit, Ferguson said. Most of the money has gone to collecting, assimilating and preparing documents.

Ballpark shares for each state were worked out Monday under a formula that includes Medicaid expenditures, population and costs to the states from smoking and the illnesses that it causes, said Indiana Attorney General Jeff Modisett, who chaired the committee that devised the formula.

Ferguson said Washington would get between 1.7 percent and 2 percent of at least $193.5 billion to be distributed in the next 25 years. Another $175 billion would be set aside for certain national programs, but some of the money could end up going to Washington state for anti-smoking programs and enforcement of age restrictions on tobacco consumers.

The proposed formula is being circulated to the states for final approval, but most officials who attended the meeting expect few objections.

John Hough, Gregoire’s assistant on the case, said fees for private attorneys who helped the state sue the tobacco industry would come out of a separate settlement account that has not yet been determined.

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