GOVERNORS CLAIM TOBACCO MONEY

States say federal government has no right to any of $206 billion

WASHINGTON -- U.S. governors, displaying a united front on an issue
critical to their state budgets, plan to urge President Clinton today to
halt attempts by the federal government to claim a portion of more than
$200 billion that states captured last year in a landmark legal settlement
with the tobacco industry.

One after another, governors attending a four-day conference indicated
their resolve Sunday to defend their share of the tobacco settlement, even
though the president has included a major chunk of that money in his
proposed budget.

The only distinctions heard from the assembled state chief executives were
of tone, not of substance.

California Gov. Gray Davis, a Democrat, said he would ``very politely'' ask
the president not to take any state proceeds, which for California is
projected to total $25 billion over the next quarter century. New Jersey
Gov. Christine Todd Whitman, a Republican, said she ``violently'' opposes
any federal claim on her state's share.

``The governors feel very strongly that this is money that came through a
suit brought by the states, not by the federal government,'' Whitman said.
``It should be up to the states how they spend the money.'' She dismissed
arguments by the Clinton administration that the law entitles the federal
government to some reimbursement.

More is at stake in the tussle between the statehouses and the White House
than simply determining which government agencies will receive how many
dollars from tobacco companies. For the president and for each of the
governors, the tobacco settlement represents a windfall that could fund a
plethora of government programs or tax cuts.

The governors plan to tell Clinton their opinions during a two-hour meeting
today at the White House, their first since 46 states and the tobacco
industry reached an estimated $206 billion settlement in November. Four
other states had settled with the industry earlier for an additional $40
billion. In addition, Clinton this year has called for a new federal
lawsuit against the industry.

Clinton administration officials, aware that disputes over tobacco money
could sorely test state and federal relations, say they are holding out the
possibility of compromise. In effect, the administration appears to be
maneuvering to obtain yet another tobacco settlement, this time between the
federal and state governments.

Clinton's proposed budget assumes the federal government will receive more
than $18 billion from the tobacco settlement over four years starting in
fiscal 2001.

But a senior administration official said Clinton is seeking guarantees
that the billions of dollars from tobacco companies will be spent on
programs for public health, anti-smoking campaigns, child development and
economic aid for tobacco farming regions.

The official, speaking on the condition of anonymity, noted that federal
taxpayers spend on average of 57 cents out of every dollar allocated for
Medicaid, the health program for low-income families and the disabled. That
program, also funded by states, was a key element in many of the lawsuits
against the tobacco companies as states sought to recoup the public costs
of caring for people with smoking-related diseases.

With the federal and state governments sharing the cost of Medicaid, the
administration official asked, ``Shouldn't the federal government have at
least some assurances on how the (tobacco settlement) money gets spent?''

Some in Congress say the federal government should butt out. Sens. Kay
Bailey Hutchison, R-Texas, and Bob Graham, D-Fla., have introduced a bill
that attempts to bar the federal government from seizing any settlement
money. The administration opposes the bill. But most of the members of the
National Governors' Association are expected to support it, said Delaware
Gov. Thomas Carper, a Democrat and the group's chairman. The group
discussed the issue in a closed-door luncheon.

Anti-smoking advocates are seeking to convince government agencies that the
first priority for settlement money should be tobacco control and related
public health initiatives. Some say it is an uphill battle.

``The money's being spent like it's from a Brink's truck that dropped open
and put a bunch of cash into city hall or the statehouse,'' said Paul
Billings, deputy director of government relations for the American Lung
Association. ``There is no accountability.''