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UPDATED: House approves tobacco settlement, to net about $17 million

State House Bureau
March 20. 2013 10:44AM

The House on Wednesday approved a bill authorizing the state to enter into a new settlement with tobacco companies over the state's enforcement of the 1998 master agreement.

The settlement will net the state about $17 million, but the state may not receive the money for some time.

The Senate previously approved Senate Bill 199, which now goes to Gov. Maggie Hassan for her signature. The bill needs to be approved by March 22.

Under the new settlement, New Hampshire would receive about $30 million the tobacco companies withheld from their payments for eight years. The state would have to pay the tobacco companies $13 million, netting the state $17 million.

The tobacco companies sued 35 states, claiming they failed to "diligently enforce" the 1998 agreement. New Hampshire and 18 other states have reached agreement with the tobacco producers, but expect the settlement to be challenged by the states remaining in litigation with the companies.

The tobacco companies in the 1998 settlement claim the states did not force the non-participating tobacco companies to pay into an escrow account as required.

The non-settling companies are required to pay a similar amount to what the participating companies pay states to protect the settling companies' market share, Deputy Attorney General Ann Rice told lawmakers. Those payments would go into an escrow account.

Going forward with the suit represents a significant amount of risk that could cost the state all of the $40 million to $50 million annual payment, Rice said.

By reaching a settlement, the state resolves the litigation and the time and cost of the trial, said House Judiciary Committee Chair Marjorie Smith, D-Durham.

"If we lose, theoretically it is possible we would have to give back all of the tobacco money we've gotten so far, something like a cool half a billion dollars," she said.

This fiscal year, the state will receive $42.4 million from the tobacco companies. The first $40 million goes into the education trust fund used to pay for state adequacy grants to school districts. The rest of the money goes into the state's general fund as would the $30 million payment.

The state receives about 50 cents for every pack of cigarettes sold in New Hampshire. With sales decreasing, the state's share has gone down and the trend is expected to continue.

The agreement requires the state do additional enforcement work.

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