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Deal between New York State, tobacco companies to send millions into local coffers

A settlement announced Tuesday, Oct. 20, 2015, in

A settlement announced Tuesday, Oct. 20, 2015, in a decadelong dispute between New York and tobacco companies stemming from the landmark 1998 national settlement against cigarette companies will yield checks of about $15 million for Nassau and Suffolk counties. Credit: iStock

ALBANY - The deal announced Tuesday that ended a decade-old dispute will release $550 million tied up in fight between New York and tobacco companies while also giving a break of more than $126 million to cigarette makers.

Nassau County will get almost $15.1 million and Suffolk County will get nearly $14.7 million as result of the agreement struck between state Attorney General Eric T. Schneiderman and tobacco companies. State government will get $281.5 million of the $550 million that was set aside pending the resolution of the dispute within the national 1998 master settlement, which cost cigarette companies billions of dollars. New York City will get $146.7 million under the deal announced Tuesday.

Tobacco companies had argued they were being overcharged in annual payments required by the 1998 master settlement. That settlement allows for tobacco companies to be compensated for lost profits because of the manufacturing and untaxed sale of cigarettes by Native American tribes and other tobacco companies that didn't sign onto the settlement.

The $126 million discount compensates the major tobacco companies for lost profits from 2004 to 2014. The companies currently send $775 million a year to New York under the 1998 master settlement to compensate for the toll smoking has taken on the cost of Medicaid health care.

In addition, the companies will receive a discount on future payments based on the manufacture and sale of untaxed cigarettes. State officials said the annual discount will save companies no more than $100 million a year for the next several years based on a fixed cost per pack.

"Like the other settlements we reached with the other states, we believe this agreement makes sense," said Denise F. Keane, counsel for Altria Group, which owns the PhilipMorrisUSA tobacco company.

New York City Mayor Bill de Blasio said the companies "abused the legal system to avoid giving New Yorkers the money they're owed."

Schneiderman said he refused to join a previous settlement with 22 other states because it would have cut New York's share by half.

"Big Tobacco must pay for the damage it has done and continues to inflict on communities," Schneiderman said. "Today's announcement is long overdue, but sure to be welcomed by communities and municipalities across our state."

Since 1998, the master settlement has provided more than $16 billion to New York.


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