National lawsuits don't necessarily wind up righting consumer wrongs
THE way states handled their national tobacco settlement windfall may forecast how national mortgage settlement funds are managed — and critics say that's not good.
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The multistate tobacco lawsuit settlement in 1998 was expected to provide participating states, including Oklahoma, a combined $246 billion over the first 25 years. Health care advocates hoped the money would be used to address health needs, particularly smoking reduction, but a 2011 report by the Campaign for Tobacco Free Kids found that largely hasn't been the case.
The report showed that in fiscal year 2012, the states collected $25.6 billion from the tobacco settlement and from tobacco taxes, a near record. Yet funding for tobacco prevention and cessation programs was slashed by 12 percent — and by 36 percent over four years.
Nationally, in fiscal 2012 just 1.8 percent of tobacco revenue was used to prevent kids from smoking and help adult smokers quit; the total spent in all states on tobacco prevention programs and the percentage of tobacco revenue dedicated to those programs was the lowest since 1999.
Critics suggest the same thing may already be happening to billions reaped this year by a multistate settlement with the country's five largest mortgage services companies for alleged consumer abuses. Under that settlement, the banks will pay more than $25 billion, with $2.5 billion of that going directly to states for housing counseling and foreclosure prevention programs. But in many cases, states have chosen to use the money for other needs.
A report by Enterprise Community Partners found that just $1 billion of the $2.5 billion total was dedicated to helping distressed homeowners. Much of the remainder was directed to other uses, including propping up state spending in unrelated areas.