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Off-brand tobacco targeted by Senate

February 17, 1999
By: Anna Brutzman
State Capital Bureau
Links: SJR 19, SB 157, SB 288, SB 417

JEFFERSON CITY - Off-brand toboacco companies would have to put up money to state government to sell cigarettes in Missouri under legislation approved Tuesday by the Senate General Laws Committee.

The committee approved for full Senate debate legislation that would impose special financial obligations to sell cigarettes in Missouri by tobacco companies that are not part of the national tobacco settlement agreement.

"This model legislation must be passed to fulfill our end of the tobacco settlement," said Sen. Ed Quick, D-Liberty.

The law is a condition of the settlement reached between several states and major tobacco producers last fall.

The purpose is to protect those companies who will be paying $6.7 billion to the state of Missouri over the next 25 years from price undercutting by smaller tobacco firms that did not participate in the tobacco settlement and, thus, do not face the extra costs imposed by the settlement.

The smaller manufacturers now make up about 3 percent of the tobacco market.

The bill would set up an escrow account into which the non-participating tobacco manufacturers must deposit about one penny for every cigarette they sell in the state. The amount will increase by increments to about two cents per cigarette by the year 2007.

The amount these companies put into the escrow account will be roughly equivalent to the amount they would have paid the state had they participated in the settlement, said Sen. Franc Flotron, R-St. Louis County.

After 25 years, the small tobacco companies would get their money back unless they use it to pay claims for health-costs incurred by their products.

If the bill does not pass, supporters say Missouri would receive no funds from the major tobacco producers.

"I've been told we cannot modify or change this language without standing a chance of being in noncompliance with the settlement," Quick said.

Legislators are also facing the problem of getting this law passed before the late-June deadline set by tobacco manufacturers. Laws passed in Missouri this session would not normally go into effect until late August.

The Senate committee agreed Tuesday to add an emergency clause to the Quick bill so that were it to pass, it would go into effect immediately after being signed by the governor -- thus beating the tobacco-settlement deadline. An emergency clause will require a two-thirds approval by both the House and Senate.

Also discussed at the Tuesday committee was another suggestion for what to do with tobacco settlement funds once they start streaming in.

Flotron presented a bill that would put all tobacco-settlement money into a trust fund. The interest off this fund would go toward programs promoting children's health.

That's been the recommendation of the governor -- but Republican Flotron also voiced support for a proposal from a Republican colleague that would let Missourians vote on whether tobacco-settlement payments are covered by the Hancock limit that refunds excess revenue to Missouri taxpayers.