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Archive for Thursday, April 17, 2003

State receives tobacco payment

April 17, 2003

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— The state's receipt this week of a scheduled payment from the national tobacco settlement helped dispel fears that one cigarette maker's legal problems could block its contributions.

Atty. Gen. Phill Kline said the $41.1 million that arrived Tuesday included $21.6 million paid by Philip Morris USA.

Philip Morris had warned it might miss a $2.6 billion payment due April 15 to states that sued tobacco companies for the costs of treating sick smokers because it had to post a $12 billion bond in Illinois.

But the bond was reduced Monday to $6 billion, after the attorneys general of 33 states -- not including Kansas -- filed a request with the judge in the Illinois case.

The 1998 tobacco settlement allots Kansas a total $1.6 billion over 25 years, with payments due each April and December.

In the class-action case in Illinois, Madison County Judge Nicholas Byron said Philip Morris misled smokers into believing that "light" cigarettes were less harmful.

The judge ordered the company to pay $7.1 billion in damages to smokers and $3 billion in punitive damages, then set the company's bond for filing an appeal at $12 billion.

In Kansas, a law enacted in 1999 dedicates most of the state's tobacco settlement funds to children's programs.

But with the state now facing a $225 million budget deficit, Gov. Kathleen Sebelius proposed to issue $175 million in bonds to be repaid from the tobacco settlement money.

Legislators rejected the proposal, arguing that future tobacco revenues were an unreliable source for paying off bonds.

Meanwhile, Sebelius has until Monday to decide whether to sign a bill limiting appeal bonds in tobacco lawsuits in Kansas courts to $25 million.

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