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March 15, 1999

Miller Tells Congress: Leave Tobacco Settlement Money with States

States should be able to spend all the money, Miller says. "The key thing here is to find a compromise and move ahead. Congress and the Administration should work this out swiftly and leave the money with the states."

WASHINGTON, D.C. -- The states should be allowed to keep and spend all of the funds obtained in settlement of their lawsuits against the tobacco industry, Iowa Attorney General Tom Miller told a Congressional committee today. "Congress and the Administration should work this out swiftly and leave the money with the states," he said.

Miller addressed a Senate appropriations committee on the issue of whether the federal government should be able to recoup a large portion of the funds obtained in the tobacco settlement.

"I strongly urge the Congress to allow states to keep all of the money," Miller said at the hearing. "This is a fair and just result. The states took the risks and invested the time, money, and talent. The states brought the lawsuits to a successful conclusion. The states should receive the rewards."

One key issue is whether or not conditions are placed on how the states spend the money. "The key thing here is to find a compromise and move ahead," Miller said. "Let's free up the money for the states so we can start putting it to good use."

Miller suggested a reasonable compromise would be to place only one requirement on the funds -- that some workable portion of it be dedicated to tobacco control and prevention efforts.

"Our focus should remain on the key public policy goal of reducing the death and suffering caused by tobacco," Miller said. He emphasized again that 5,000 Iowans die each year from tobacco-related illnesses. "Even in our relatively small state, about 12,000 Iowa kids become new daily smokers each year -- and about 4,000 of them will die from tobacco-caused disease," he said.

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Additional background information and comment:

The federal government has a potential claim on a large portion of the settlement, which will total $246 billion nationwide through the year 2025. Iowa's share is over $1.7 billion. To the extent the settlement is considered recovery of Medicaid funds paid for tobacco-related disease in Iowa, the federal government has a potential claim on up to 65 percent of the funds, since federal tax dollars fund 65 percent of Medicaid payments in Iowa.

But Miller said the settlement shouldn't be considered merely a Medicaid recovery. "Our lawsuit contained several causes of action," he said. "We also had strong claims under the Iowa Consumer Fraud Act, common law nuisance, and the new Iowa law concerning ongoing criminal conduct."

Miller said there is a growing consensus among Iowa leaders -- including the Governor and legislative leaders -- that Iowa must mount a major tobacco prevention and control effort. On February 18, Miller and the Tobacco-Free Iowa Coalition proposed that $17.7 million of Iowa's settlement money should be spent next year on a Comprehensive Iowa Plan for Tobacco Prevention and Control. Gov. Tom Vilsack joined them at the news conference and pledged to support an effective tobacco control program. The $17.7 million program would use only a portion of the $76.6 million Iowa share next year of the tobacco settlement funds.

"Congress should act expeditiously on this issue," Miller said. "Delay only adds uncertainty and confusion. In Iowa, the Governor and the Legislature want to appropriate the money in a responsible way that benefits our citizens. They cannot do so until the Congress and Administration act on this issue."

Miller addressed the Senate Appropriations Subcommittee on Labor, Health and Human Services and Education today. The committee is chaired by Sen. Arlen Specter of Pennsylvania.

The tobacco settlement money issue is part of Congressional deliberations on the fiscal 1999 supplemental appropriations bill (S544). Sen. Kay Bailey Hutchison of Texas succeeded in adding a provision to block the federal government from taking a share of the $246 billion in settlement funds. It has been reported that Sen. Harkin and Sen. Richard Durbin of Illinois plan to ask the full Senate to require the states to spend up to 25 percent of the funds for tobacco-reduction programs.

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