District of Columbia - takes from tobacco fund to bridge budget gap..

August 7, 2009 - Washington, District of Columbia council members facing a budget shortfall threatened to raise property and other taxes rather than cut more from the budget. At-large Councilman David Catania, chairman of the health committee, offered additional dollars from the tobacco settlement fund to bridge the gap.

The pot was ultimately drained of nearly $27 million (taking from the tobacco fund: Fiscal 2009: $18.3 million; Fiscal 2010: $4.84, Fiscal 2011: $4 million) Councilman Catania: “No one likes having to use part of these proceeds for gap-closing measures, but the alternative was worse, and that’s why we recommended that we use a portion, not all. There still will be substantial tobacco funds held in reserves for future activities.”

The council also backed a cigarette tax increase, from $2 to $2.50 per pack. The associated revenue, expected to be $9.7 million in 2010, will flow to the general fund. Anti-smoking activists want the D.C. Council to devote new funding for cessation programs after the body voted to hike the cigarette tax and raid the tobacco settlement fund but dedicate the associated revenue to the budget shortfall.

This is not the first time D.C. has redirected its tobacco money. The city converted settlement fund payments into $521 million in bonds in 2001 and used the entire balance to pay off debt.

The Campaign for Tobacco-Free Kids, for example, is warning that the DC Tobacco Free Families prevention and cessation program, first funded three years ago with settlement dollars, will be bankrupt Sept. 30 without additional support.

Ten Yrs Later the 1998 State Tobacco Master Settlement Agreement (MST)..

Reference: Smoking critics irked as D.C. diverts tobacco funds by Michael Neibauer, WashingtonExaminer.com, 8/7/2009.