JEFFERSON CITY, Mo. – Discussions have again arisen in the Missouri legislature about repealing the allocable share fund as a way to possibly bring Missouri into compliance with the Tobacco Master Settlement of 1998.
Missouri was penalized in 2013 after it was found the state failed to do due diligence to enforce settlement terms in 2003, reducing Missouri’s portion of the settlement from $130 million to $60 million. Attorney General Chris Koster sued to repeal the decision, which a St. Louis judge ruled in favor of in 2015. In October, the additional $50 million was put in question again in September when the Court of Appeals reversed the decision.
Instead of waiting for the case to be taken to the Supreme Court by Koster, some legislators are discussing simply repealing the allocable share fund, which is questioned by Rep. Eric Burlison, R-Springfiled. The allocable share fund is in place for tobacco companies outside of the three tobacco companies addressed in the settlement.
“The way that the allocable share fund works is that they get that money back after time if they weren’t sued,” said Burlison. “Those companies that weren’t sued are able to keep their products more affordable than those companies that were not sued. So that is, according to those companies who were part of the Tobacco Master Settlement, putting them at a competitive disadvantage. The truth is it would be like saying if my campaign opponent committed an ethics violation, and had to pay thousands of dollars in fines and fees, that it would somehow be my responsibility to pay fines and fees for them to remain competitive.
The issue has been revisited by the legislature many times. In 2012, it was placed on the ballot for a public vote by a coalition called Fair Trade.
“They’ve tried several routes to get this done, putting in on ballots, trying to get the legislature to do it, trying to get the attorney general and governor to apply the pressure,” said Burlison. “This is really just a turf war between businesses and the legislature needs to do it’s part and stay out of it. It is my hope that we would continue to stay out of it and leave it between competitive.”
R. J. Reynolds, one of the companies party to the settlement, has supported reform.
“Our position is the allocable share amendment should be passed to level the playing field, Missouri obviously has substantial funds at risk if they do nothing to resolve the issue,” Bryan Hatchell, spokesman for Reynolds American Inc., a parent company of R.J. Reynolds Tobacco Co. told The Missouri Times in April 2014. “I can tell you, that we believe the state of Missouri still has time to resolve this issue, and the legislature needs to act on this issue in the next two weeks. If there is an active will they can get it done.”
“It is not a question of fairness,” Burlison said. “The question is why should they be fined just in order to create some level of fairness between companies.”
Burlison questioned the discussed solution, which he believes is a red herring, tracing the issue back to 2003, when Gov. Jay Nixon was attorney general.
“If we don’t address it, the state may be at a loss because of the mistakes of Gov. Jay Nixon, when he was attorney general, in 2003, 2004, and 2005,” said Burlison. “When he was attorney general, he was not doing due diligence in his job as attorney general in prosecuting as required by the master settlement. What they tried to argue a year ago was in order for him to be in compliance from due diligence, we should have to eliminate our allocable share fund. But the commission that settled on the national level, the commissioners actually said that Missouri position to repeal the allocable share fund would have no impact on whether or not our attorney general was found to be performing in due diligence. That kind of threw cold water on the argument that we would have to repeal allocable share in order to comply.”
When asked if he thought the repeal would essentially levy an additional tax to tobacco companies outside of the settlement, Burlison had a simple answer.
“Because at the end of the day, they would be required to pay these fees that they would not get a penny back for.”
Burlison will continue to question the continued discussion.
“Why would a company that hasn’t done anything wrong have to pay into something that they didn’t do?”
The deadline, as in past years, is April 15.
Rachael Herndon was the editor at The Missouri Times and also produced This Week in Missouri Politics, published Missouri Times Magazine, and co-hosted the #MoLeg podcast. She joined The Missouri Times in 2014, returning to political reporting after working as a campaign and legislative staffer.
Rachael studied at the University of Missouri – Columbia. She lives in Jefferson City with her husband, Brandon, and their two children.