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SALT LAKE CITY — An extension to the 1998 tobacco settlement, the largest civil settlement in U.S. history, was announced Thursday, allowing Utah to collect $57 million in payments for 2023 and 2024.
The four largest tobacco companies agreed to a settlement from 52 state and territory attorneys general, including the former Utah Attorney General Jan Graham in 1998, to pay at least $206 billion to the represented states over a 25-year period. Lawsuits from the states argued they were shouldering billions in health care costs treating smoking-related illnesses, with the money of taxpayers who did not necessarily use the companies' products.
Utah, which was awarded a little over 1.8% of the total fund allocation, has received approximately $822 million to date. Certain conditions came with the settlement, such as the enforcement of an agreed upon tobacco tax rate. Tobacco companies claim Utah failed to "diligently enforce" the rate, disputing the state's abilities to receive annual payments for years 2004 through 2022.
This dispute was resolved in 2018, with Utah agreeing to "restructure our compliance and enforcement regime to meet the settlement obligations" without any more challenges, according to Utah Attorney General Sean Reyes. That agreement, which stretched through 2022, pushed the state to increase its "tobacco tax enforcement of internet sales, contraband sales of tobacco products, and tobacco products sold on reservations to non-Native American customers," Utah Tax Commissioner John Valentine said.
The annual payouts served as compensation for tax spending connected to tobacco-related diseases and the hardships these diseases place on local economies. Money was also set aside with the goal of lowering tobacco use and helping smokers quit, through the organization Truth Initiative.
But many states, according to researchers from the American College of Chest Physicians, have taken the payouts meant for tobacco control and used them "as a 'cookie jar' for almost any and all state spending."
Anti-tobacco advocates report that companies spend nearly $12 to market tobacco products for every $1 the states invest to reduce tobacco use, even with stricter advertising guidelines laid out in the agreement.
Across the board, they say states have funded around 22% of the recommended amount for tobacco prevention and cessation programs in 2023. This comes even after receiving more than $1.1 billion from a recent settlement from the electronic cigarette company, Juul. At 80%, Utah is ranked second for the percentage of funding it gives toward these programs.
Data from 2021 shows that only 1.9% of Utah high schoolers smoke cigarettes, compared to 3.8% nationally. E-cigarettes and vapes are substantially more popular, with 9.7% of high school students in the state reporting using them in the last 30 days, compared to 18% across the country.
Utah received an estimated $136.8 million in revenue from tobacco settlement payments and taxes in the fiscal year 2023, according to the Truth Initiative. The estimated health care cost on the taxpayer, however, is around $630 million per year.
