House Appropriations members hear primer on tobacco settlement fund and its shrinking balance

Emily Byrne, a policy analyst with the Joint Fiscal Office, briefed the House Appropriations Committee on Thursday on the sources, recent uses and projected balance of the state’s Tobacco Settlement Fund.

Byrne told the committee the fund’s main revenue source is the 1998 Master Settlement Agreement between tobacco manufacturers and states, and that Vermont receives a fixed share of the national payments: “the tobacco settlement fund, it’s sort of main source of revenue comes from the master settlement agreement that was agreed to by 52 States and territories, in 1998 with the tobacco companies,” she said. Byrne said that Vermont’s share has generally been near $20 million in recent years but is forecast to fall over time.

The presentation laid out recent balances and appropriations. Byrne said the fund received about $24 million from the national settlement in fiscal 2024 and carried forward roughly $16 million in prior balances, producing about $41 million available. Most of the fund’s appropriations flow to the Global Commitment Fund to match federal Medicaid dollars; other appropriations include prevention and program support designated under earlier laws. Byrne described a 2018 one‑time payment tied to litigation settlements that funded multi‑year appropriations often referred to in the meeting as the “CHINS money” (Act 11 appropriations).

By Byrne’s figures, FY 2024 appropriations totaled about $25 million, leaving roughly $15.4 million in the fund at the end of FY 2024. For FY 2025, the budget assumed a roughly $20 million settlement payment; with appropriations near $28 million, Byrne said the projected fund balance at the end of FY 2025 was about $7.3 million. She said that some of that carries forward as one‑time money that has been used to smooth appropriations in subsequent years.

Looking ahead, Byrne walked the committee through FY 2026 and FY 2027 projections. She said FY 2026 projections include roughly $18 million from the settlement plus prior balances, leaving an expected end‑of‑year balance of about $1.4 million. For FY 2027 she said projected receipts and carry‑forward would be about $18.6 million against roughly $24 million in assumed appropriations, which would produce a projected shortfall of about $5.8 million unless appropriations or revenues change.

Byrne emphasized that some appropriations are effectively obligated for multi‑year programs: money from the 2018 Act 11 appropriation was described as committed to those program purposes until the legislature changes that law. She also noted that the Attorney General’s Office manages the state’s participation in the Master Settlement Agreement and can provide additional legal detail about how payments are calculated and distributed.

Committee members asked clarifying questions about which programs receive the fund’s dollars and about the timing of receipts and obligations. Byrne said she would refer specific program line‑item questions (for example, education‑related uses) to the Attorney General’s Office and the responsible agencies.

The committee did not take formal action during the presentation; the briefing was intended to inform members preparing for budget decisions.

Ending: The Joint Fiscal Office’s overview framed the Tobacco Settlement Fund as a steadily declining revenue source under current appropriation and receipt assumptions. Committee members were left with follow‑up items: confirm program line‑item recipients of tobacco funds and consider whether to adjust appropriations or identify alternative funding to avoid a FY 2027 shortfall.