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Excerpts from The Tobacco Settlement What Will It Mean for California?

Legislative Analyst's Office [01/14/99]

ASH NOTE--California's Legislative Analyst's Office has put together a page summarizing the major aspects of the national tobacco settlement.  Some of the material is specific to California, however, much of the material relates to the general structure, facts, possible legislative actions, and "what if's" resultant of the settlement.

ASH has provided an outline of the topic areas covered in the LAO report.  Please browse the headings. 

Introduction

The attorneys general of most states and the major United States tobacco companies have agreed to settle more than 40 pending lawsuits brought by states against the tobacco industry. In exchange for dropping their lawsuits and agreeing not to sue in the future, the states will receive billions of dollars in payments from the tobacco companies and the companies will restrict their marketing activities and establish new efforts to curb tobacco consumption.

Major Findings

In this report, we review the settlement agreement and its potential impact on California, answer a number of questions about how the agreement would work, and raise a number of issues for consideration by the Legislature.

Considerations for the Legislature

• Summary of the Settlement/Key Features of the Tobacco Settlement [Table]
• How Many States Are Part of the Agreement?
• What Companies Are Part of the Agreement?
• Does the Settlement Require Validation?

• Who Gets the Money?
• How Can the Money Be Spent?
• Does the Settlement Money Count Towards the VLF Trigger?
• When Will the Money Be Available?

• Actions of the Federal Government That Could Offset Payments.
• Actions of the Federal Government to Seek Reimbursement for Health Care Costs.
• Drop in Cigarette Sales.
• Lawsuits by Nonparticipating Local Governments.
• Tobacco Company Bankruptcy.
• Reduction in Market Share of Settling Companies.
• Increased Payments From the "Strategic Contribution."
• Increases Due to Inflation Adjustments.

• What Happens to the State's Case as a Result of the Settlement?
• How Is the Settlement Different From a Resolution Resulting From a Trial?
• Can Californians File Lawsuits as Individuals or in Class Action Lawsuits Against the Tobacco Companies?
• How Will the Settlement Be Enforced?

• Public Health Provisions of the Settlement [Table]

Differences Between the Settlement and Previous Agreements The 1997 "Global Settlement"

• Settlements With the Four Other States

• Comparison of Tobacco Settlement and Proposition 10 [Table]

What Should the Legislature Do?

• Recognize Funding Uncertainties in the Long Run
• Recognize Benefit to Local Governments

• Consider Adopting the Model Legislation Included

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