This Tobacco Money May Be Hazardous To Your Health

When 46 states agreed in 1998 to settle their claims against the nation's tobacco companies for $206 billion, they promised that a "significant" portion of the money would go toward antismoking efforts. In fact, only 5% of the money has been used for that purpose, according to the National Conference of State Legislatures, with much of it going to such things as education, capital improvements and budget shortfalls. But perhaps no state has been quite so brazen in distorting the purpose of the settlement money as tobacco-producing North Carolina, which has directed only 1.2% of tobacco revenues to smoking prevention.

Last fall Golden LEAF (Long-Term Economic Advancement Foundation), a nonprofit organization established by the North Carolina General Assembly to distribute half the state's settlement revenues, spent $15,000 for a tobacco-history video. Perhaps more egregiously, it granted rural Nash County $400,000 for water and sewer engineering to attract a tobacco-processing plant. "The money is going in a circle here," says Don Carrington, vice president of the John Locke Foundation, a state-government watchdog group.

Proponents of the plan say the water and sewer improvements will expand service along a five-mile undeveloped stretch, and the plant will bring 1,100 jobs to a region where unemployment is above 10%. "This is a perfectly allowable use of the funds," says John Gessaman, president of the economic-development corporation that applied for the grant. It may be perfectly legal, but then again, so is smoking.

--By Sean Gregory