WASHINGTON -- As states begin deciding how to spend the financial spoils of the tobacco settlement, the Clinton administration is set to push its own agenda, demanding the money be spent on anti-smoking and other public health programs.
Many state officials agree and say a negotiated resolution is possible, but fights have already begun: In New Hampshire and Maryland, leaders want money for schools; in New York, Minnesota and Massachusetts, the cry is for tax cuts.And in Los Angeles, the mayor is eyeing sidewalks.
"It's going to be a real food fight in every state," said Bill Novelli of the Campaign for Tobacco-Free Kids.
Some in Congress want to keep the White House from butting into the battles. And states insist that if the federal government wants to dictate spending, it should file its own tobacco lawsuit.
"We know they're going to try and horn in," said John Truscott, spokesman for Michigan's Republican Gov. John Engler. "The irony here would be that the feds try to solve it, the deal falls apart, the states get it done, so the feds try to take our money."
Four states reached independent deals with the tobacco industry worth a total of $40 billion, and the 46 others signed a separate $206 billion deal last month that will disburse the money over 25 years beginning in 2000.
The administration contends the federal government has a right to some of the money. Many of the original state lawsuits were to reclaim Medicaid spending on sick smokers. Because the federal government pays for at least half of Medicaid in each state, the law requires Washington to recoup at least half of any settlement, administration officials say.
"We can't just look the other way," said Bruce Reed, President Clinton's domestic policy adviser. "We're not looking for a way to take the states' money away, but . . . our obligation is to the taxpayers."
Last year, the administration told states that settled tobacco suits early that the Health and Human Services Department would start deducting its share of the spoils from future Medicaid payments to the states.
HHS backed off under pressure from Congress, but the dispute remains.
States argue that many of their suits were unrelated to Medicaid, meaning the federal government has no right to the money. Some claims, for instance, were based on consumer protection laws.
But the federal government could begin docking Medicaid payments anyway and states would have to sue to get the money back, creating a nasty fight.
Tobacco legislation scuttled by Congress this year would have required states to spend at least half their proceeds on seven programs including child care, child welfare, drug treatment and children's health insurance.
In any negotiated settlement with the states, Reed said, the administration will insist on adding provisions to discourage teen smoking and other anti-tobacco programs, since those aren't in the $206 billion state deal.
But there's also an effort in Congress to let the states keep their money and avoid negotiating with the administration altogether. A similar attempt failed this fall and a renewed try next year may be complicated by related issues, such as efforts to give the government power to regulate tobacco.