DALLAS — Kansas has received $62.2 million in its annual tobacco settlement payment, according to Attorney General Derek Schmidt.
The $62.2 million total is "within the range of payments received by Kansas in recent years," Schmidt said.
Kansas entered into a legal settlement in 2012 with several tobacco companies to resolve a long-running dispute that had put future years' payments at risk. The settlement term sheet was approved by an arbitration panel composed of retired federal judges in 2013.
Without that settlement, the dispute had threatened to cause a "catastrophic reduction" in future years' payments to Kansas, Schmidt said.
"As we said last year, the settlement in principle is having the effect of stabilizing Kansas' annual payments," Schmidt said. "We are managing the settlement proceeds in a way calculated to minimize the spikes or drops in receipts from year to year so that legislators and other Kansans can plan reliably."
The annual payment will reimburse the state for funds previously appropriated by the legislature to pay the current fiscal year's cost of programs financed from tobacco settlement proceeds. Because of the timing of the annual tobacco payment in comparison with the state budget cycle, the legislature each year appropriates the funds that will not be received until the following April and then reimburses that amount when the annual payment is received.
Each April, Kansas receives a payment pursuant to the 1998 Master Settlement Agreement. The amount of the payment fluctuates based on several variables, including annual sales of certain tobacco products, Schmidt said.
Kansas was one of 22 states that reached a settlement of arbitration with tobacco companies in 2012 under the 1998 Master Settlement Agreement.
The tobacco companies that were party to the 1998 Master Settlement questioned whether the states sufficiently enforced rules aimed at preventing those tobacco companies that did not participate in the settlement from gaining a competitive edge. The participating tobacco companies had withheld funding in escrow until the settlement.
