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Senate fiscal staff outline tobacco settlement fund: one‑time cushion shrinking, ongoing appropriations at risk
Summary
Fiscal staff reviewed history and projections for the state's tobacco settlement fund, showing a projected drop in available balance across FY26–FY27 and noting that most of the fund currently supports Medicaid match; senators queried program priorities such as school cessation, parent‑child centers and Medicaid matching.
Senate Appropriations members received a briefing on the state's tobacco settlement fund and the “master settlement” payments that feed it, with fiscal office analyst Emily Burns explaining recent payments, historical uses and projected balances through FY27.
“The tobacco fund itself is funded through the the master settlement agreement,” Burns said, summarizing the fund’s origin and purpose. She told the committee that the receipts are made annually and that recent atypical increases reflect adjustments from prior years.
Current uses and projections: the fiscal presentation showed that a large share of tobacco settlement receipts are used as a Medicaid match (the Global Commitment fund) and to support public health programs, education cessation efforts, and other smaller appropriations such as attorney general oversight. Using figures presented to the committee, the fiscal office summarized FY24 and FY25 balances and FY26–FY27 projections: the FY24 available balance was presented as roughly $41 million (including prior‑year funds and settlement receipts) with $25 million in appropriations leaving a carryforward near $15 million; FY25 prior‑year funds were projected at $10 million; FY26 settlement receipts were projected at about $18.5 million for a total available of roughly $28.5 million and projected appropriations near $24 million, leaving an estimated FY26 year‑end balance near $4.1 million; FY27 projections indicated continued lower receipts and, if appropriations remain at FY26 levels, a projected deficit in FY27 (figures presented showed a potential FY27 shortfall on the order of several million dollars).
Committee concerns and choices: senators pressed how the committee should treat one‑time versus base funding for proposals the committee has heard, especially for programs such as parent‑child center cessation efforts, school cessation grants, and Medicaid match uses. One senator asked why the fund would run a deficit rather than cutting programs to match receipts; fiscal staff answered that the current prior‑year balance provides a one‑time cushion but that continuing base spending at current levels would exhaust the cushion by FY27. Burns reiterated that some appropriations are one‑time or set aside for specific statutory uses (for example, certain judicial obligations) and that the fund’s ongoing use as a Medicaid match is a large driver of annual spending.
Policy choices: members discussed whether to direct tobacco funds toward prevention programs (school cessation, parent‑child centers) or to preserve the fund primarily for Medicaid matching. A request was raised to consider short‑term transfers or reallocation, but staff cautioned that appropriations now would deepen future shortfalls unless offset elsewhere. Senators asked staff to prepare options and to flag items that could be moved from base to one‑time appropriations to preserve the fund longer.
No formal votes were taken; the committee used the briefing to inform upcoming budget decisions.
