State checking to see if tobacco revenues will decline under settlement

Nevada officials are checking whether Nevada may get less tobacco money than expected due to declining cigarette sales.

The issue was recently raised in Connecticut where officials say they may lose up to 10 percent of the cash they originally expected this year because tobacco sales have declined.

Nevada Deputy Attorney General John Albrecht said there is a clause in the settlement agreement that decreases payments the industry owes individual states if sales go down "on the theory that if they're selling less cigarettes, they're doing less health damage."

The first payments due to the states involved in the tobacco Master Settlement Agreement have been delayed until Dec. 14. The Attorney General's Office noted that the payment, about $15 million in Nevada's case, was originally scheduled for Wednesday.

But he said Nevada and many other states don't know whether the concerns raised in Connecticut will apply to them.

One difference is that tobacco sales aren't declining in Nevada. While tobacco tax collections - a good measure of sales - were up just .5 percent for the first three months of this fiscal year, they were up 4.3 percent during the fiscal year which ended June 30 and 13.9 percent for the previous fiscal year.

That, however, doesn't necessarily mean sales are leveling off, because the year before that big increase, taxes were up just 4.9 percent and the tax rate has remained unchanged since 1989.

Albrecht said it isn't clear exactly how the terms of the settlement will change what individual states collect if sales in one state or sales overall level off or decline.

"We're going to have to ask the (National Association of Attorneys General) for a clarification," he said. "But you can absolutely say that there could be a reduction."

Nevada stands to get between $45 million and $50 million a year from the tobacco settlement. About half of that has been set aside for the "millennium scholarship" program designed to provide cash to Nevada high school graduates with a B grade-point average or better to attend Nevada's universities or community colleges. The rest has been dedicated to education and health programs.