GOVERNORS DEMAND

ADDICTION, DEATHS CONTINUE

The full newspaper article may still be archived at:
http://www.journalnow.com/

EXCERPT from
Winston-Salem Journal, August 7, 1999

Tobacco-state governors ask peers to oppose suit
By Kirsten B. Mitchell
JOURNAL WASHINGTON BUREAU

Governors from the major tobacco-growing states  -- Georgia, North Carolina, South Carolina, Tennessee and Virginia -- warn the nation's governors that a Justice Department suit against the industry would be "dangerous and unnecessary" and could prompt "enormous economic losses" nationwide if it were successful.

A letter that the five governors signed July 15 cited a study, paid for by Philip Morris, showing that if the Justice Department prevails in a lawsuit financed by taxpayers, the 50 states and the District of Columbia could lose as much as $3.69 billion a year.

The study, by the American Economics Group in Washington, said that North Carolina could lose $9.3 million to $40.54 million a year. The figures vary widely because the group used assumptions from both the Treasury Department and the Congressional Budget Office based on projected settlements of $250 billion and $500 billion.

The study says that a federal lawsuit would increase cigarette prices, which would decrease sales. As sales drop, the study says, so would sales and excise taxes, along with the amount of money the states would be able to collect under the $206 billion, 25-year settlement that they reached with the tobacco industry last year over smoking-related health claims. North Carolina's share of the national settlement is $4.6 billion.

"The creative projects that you and others have developed for your state to use these funds will be cut back, perhaps sharply," said the letter, signed by Hunt and Govs. Roy Barnes of Georgia, James Gilmore of Virginia, Jim Hodges of South Carolina and Don Sundquist of Tennessee.

"Allowing the use of taxpayer dollars to sue businesses in pursuit of policy objectives that could not be achieved through the normal and appropriate legislative process threatens all industries in all states," the letter says.

The Justice Department continues to lobby Congress for $20 million to prepare the suit, promised by President Clinton in his State of the Union  Address in January. The Senate recently agreed to  let the suit  move forward, but said it would not provide $20 million that the department  asked for.

"We feel like the evidentiary collection is immense, and the potential damages are unprecedented, so we think the money is crucial," said Chris Watney, a Justice Department spokeswoman.  "At this point, we haven't given up."

Added  8 August 1999, Links updated 18 March 2000