Governors defend tobacco windfall; States won lawsuit, but Clinton budget covets settlement funds


WASHINGTON -- U.S. governors, displaying a united front on an issue critical to their state budgets, plan to urge President Clinton today to halt attempts by the federal government to claim a portion of more than $200 billion that states captured last year in a landmark legal settlement with the tobacco industry.

One after another, governors who are here for a four-day conference indicated their resolve yesterday to defend their share of the tobacco settlement, even though the president has included a major chunk of that money in his proposed budget.

The only distinctions heard from the assembled state chief executives were of tone, not of substance.

California Gov. Gray Davis, a Democrat, said he would "very politely" ask the president not to take any state proceeds. For California, the windfall is projected at $25 billion over 25 years.

New Jersey Gov. Christine Todd Whitman, a Republican, said she "violently" opposes any federal claim on her state's share.

"The governors feel very strongly that this is money that came through a suit brought by the states, not by the federal government," Whitman said. "It should be up to the states how they spend the money."

She dismissed arguments by the Clinton administration that the law entitles the federal government to some reimbursement.

More is at stake in the tussle between the statehouses and the White House than simply determining which government agencies will receive how many dollars from tobacco companies. For the president and for each of the governors, the tobacco settlement represents a windfall that could fund new government programs or tax cuts.

The governors plan to tell Clinton their opinions during a two-hour meeting today at the White House, their first since 46 states and the tobacco industry reached an estimated $206 billion settlement in November. Four other states had settled with the industry earlier for $40 billion. Clinton has called for a federal lawsuit against the industry.

Administration officials, aware that disputes over tobacco money could sorely test state and federal relations, say they are holding out the possibility of compromise. In effect, the administration appears to be maneuvering to obtain yet another tobacco settlement, this time between the federal and state governments.

Clinton's proposed budget assumed that the federal government would receive more than $18 billion from the tobacco settlement over four years, starting in fiscal 2001.

But a senior administration official said Clinton is seeking guarantees that the billions of dollars from tobacco companies will be spent on programs for public health, anti-smoking campaigns, child development and economic aid for tobacco farming regions.

The official, speaking on condition of anonymity, noted that federal taxpayers provide about 57 cents out of every dollar allocated for Medicaid, the health program for low-income families and the disabled. That program, also funded by states, was a key element in many of the lawsuits against the tobacco companies as states sought to recoup the costs of caring for people with smoking-related diseases.

With the federal and state governments sharing the cost of Medicaid, the administration official asked, "Shouldn't the federal government have at least some assurances on how the [tobacco settlement] money gets spent?"

Some in Congress say the federal government should butt out. Sens. Kay Bailey Hutchison, a Texas Republican, and Florida Democrat Bob Graham have introduced a bill that attempts to bar the federal government from seizing any settlement money. Most members of the National Governors' Association are expected to support it, said Delaware Gov. Thomas R. Carper, a Democrat and the group's chairman.

Pub Date: 2/22/99

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