Koster To Legislature: $130 Million Coin Toss

With little fanfare, Attorney General Chris Koster sent a letter to the legislature last month warning that the state may forfeit “between 21% and 100% of the $130 million Tobacco Settlement payment the State previously received for calendar year 2003.  To repay that obligation, any forfeiture will be automatically deducted from the $130 million (projected) Tobacco Settlement payment Missouri anticipates receiving in April 2014.  The purpose of this letter is to bring this serious risk to Missouri’s FY 2014 consensus revenue estimate to your attention…


“As part of the Tobacco Settlement, every State agreed to enact a model escrow statute requiring Non-Participating Manufacturers – cigarette manufacturers that did not sign the Tobacco Settlement – to make annual escrow deposits…”   Missouri hasn’t enacted such a statute, and is the only state which isn’t in compliance.


The letter continues… “The Participating Manufacturers’ claim against Missouri to recoup part or all of the 2003 Tobacco Settlement payment will go to verdict sometime next fall.  The Office of Attorney General advised your predecessors every year for the last decade that their legislative inaction could eventually harm the State.  While we hope our legal defenses will be successfully, we estimate an even chance that the arbitration panel will find Missouri did not ‘diligently enforce’ its escrow statute in 2003…”


Will the legislature accept this $130 million coin toss?  Or will they address it?  Sen. Kurt Schaefer has a bill to close this loophole.  But previous attempts to pass it have been in vain, (“This act is identical to SB 629 (2012), SB 375 (2011) and HB 491 (2011).”) thanks to the effective lobbying of Andy Arnold.


Originally in February 21 MOScout.