STATE MAY WAIT FOR TOBACCO CASH

Washington is in line to receive about $4.2 billion of a $206 billion
settlement tobacco companies agreed to yesterday, but the state might not
see any of that cash for another 19 months.

Washington Attorney General Christine Gregoire, who announced that 46
states and most of the industry had signed on to the settlement, said
she'll ask Washington's Legislature to create a special fund for the
settlement money that would be exempt from voter-approved spending limits.

"It is a great day for the attorneys general," said Gregoire, the lead
state negotiator. "I don't think anyone can deny this is a huge victory for
the attorneys general and a huge loss for the industry."

The annual payments to Washington state of about $160 million are scheduled
to begin no later than June 30, 2000. But they may not be quite that big if
the federal government gets its way.

Gregoire talked to White House staff members yesterday about the federal
government's potential cut of the money, reaffirming her stance that the
states' are entitled to the entire settlement, said her spokeswoman, Liz
Mendizabal.

However, Gregoire does believe that some of Washington's tobacco money
could, for example, be funneled into health programs currently paid for
with federal tax dollars, Mendizabal said.

Gregoire wants the state to spend the settlement money first on tobacco
prevention and secondly on general health programs. However, the
Legislature will make the final call.

She sent a letter to lawmakers yesterday urging them "to channel settlement
dollars to programs that are consistent with the purpose of our lawsuit -
tobacco prevention and control and public-health programs."

Gregoire asked lawmakers to consider the recommendations of a 47-member
task force she created, which suggested spending $51 million on smoking
cessation and education programs. She also recommended using some of the
money to help the Basic Health Plan, which provides state-subsidized health
insurance coverage for 137,200 low-income people in Washington.

Gov. Gary Locke appears to support Gregoire's notion of how the money
should be spent, noting a similar set of priorities at a news conference
this week.

But Locke also indicated that he would like to see some of the money flow
into the general fund for education and other services that have suffered
as a result of having to spend so much money on smoking-related health
issues.

Gregoire, the lead negotiator for the states, said attorneys for both sides
expect to sign the documents Monday, which will mark the ninth week of a
trial in Washington state's lawsuit against the industry.

The jury went into recess following Thursday's testimony and was scheduled
to return Tuesday.

Gregoire said King County Superior Court Judge George Finkle would review
the settlement documents over the weekend. Gregoire plans to be in court
Monday to answer any questions, and she said the judge could dismiss the
case as early as Tuesday.

Washington state's lawsuit accused seven tobacco companies of conspiring to
violate antitrust and consumer-protection laws, suppressing health research
and manipulating nicotine levels. The state sought as much as $2.2 billion
to cover insurance costs related to illnesses caused by smoking.

Information from Reuters and The Associated Press is included in this report.