As tobacco sales decline, so does tobacco money for Jefferson County

A steady decline in smokers nationwide has meant a slight decline in money for Jefferson County.

But the county’s conservative fiscal decision at the turn of the millennium appears to have paid off.

Money from the 1998 settlement with tobacco companies “may continue to tail off, because consumption is declining,” said Michael E. Kaskan, the deputy county administrator. “It’s less money for us, but it’s a good thing for the country as a whole.”

A settlement of 46 states’ attorneys general forced tobacco companies to pay the states a certain amount of money, based on cigarette sales, to deal with the rising costs of health care associated with smoking.

In New York, counties are partially responsible for the cost of Medicaid, so they receive a portion of the settlement money.

In 2000, the first full year of payments, the county received $1.4 million from the tobacco company settlement. In 2012, it received $1.3 million, a slight decrease, and not, as expected, an increase that kept up with inflation. In its most fruitful years, the tobacco settlement produced more than $1.8 million for Jefferson County.

The county has taken in $20.2 million total in the dozen years since the settlement was reached. It could have taken less money, sooner, with a lump sum, by selling bonds for the payments. The county would have received $15 million right away in 2000, and would have paid bond holders using the stream of money that has come in over the years.

Some governments, including Nassau County on Long Island, are in financial arrears because they spent the lump sum up front, and the money coming in yearly isn’t enough to pay off the bonds, according to a report in the New York Times.

Jefferson County isn’t in that sort of trouble.

“Congratulations,” said Russell C. Sciandra, an official with the American Cancer Society in New York. “It was a bad investment from the very beginning.”

Mr. Sciandra said one county took the fast money and bought golf carts for a municipal golf course.

“We knew that smoking rates were going to continue to go down,” Mr. Sciandra said. “Of course, the tobacco companies are going to look for every excuse to reduce their payments.”

The payments were supposed to last forever, but tobacco companies are attempting to change the terms of the deal, according to the Times.

Could the tobacco money go up in smoke?

“Forever’s a long time, isn’t it?” Mr. Kaskan said. “There’s nothing immediate in the five to 10 years that we can see that this is going to stop.”

In years past, the tobacco settlement money that came into Jefferson County was more than enough to cover the cost of debt service from construction costs on the county’s new courthouse. It’s about equal nowadays, Mr. Kaskan said.

“We’re happy with it,” he said. “Obviously we’re going to take in quite a bit more.”


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