Beacon Journal | 01/19/2007 | Funding could go up in smoke:
Ohio could find itself shorted tens of millions of dollars in tobacco-settlement funds if a Wall Street analyst is correct.
Bear Stearns Cos. said late Thursday that it has learned that payments scheduled to be made this year to states that participated in a 1998 health-care settlement with cigarette makers could be reduced $1.14 billion from a projected $6.45 billion.
That is a reduction of about 17 percent.
Ohio is budgeted to receive $295 million in the current fiscal year, which ends June 30, and a like amount in the next. If the reduction is applied across the board, Ohio's payment could be cut to $244 million.
About $251 million of Ohio's tobacco settlement money in the coming fiscal year is slated to go to construction of school buildings. The rest was slated for programs such as biomedical research and public health.
New York-based Bear Stearns, citing unnamed industry sources, said the Brattle Group, a consulting firm hired by the states and cigarette makers, issued a preliminary report earlier this week finding that the restrictions imposed by the accord have been a ``significant factor'' in reducing manufacturers' market share.
Cigarette makers may use the decision to withhold part of the projected $6.5 billion they owe states this year under a provision that allows them to adjust payments based on market share. A final report from the Brattle Group is due in February, Bear Stearns said.
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