By Cezary Podkul and Claire Kelloway, ProPublica
Each April, cigarette manufacturers pay states billions of dollars to reimburse them for the health-care costs of smoking. About $100 billion has been paid so far, all under a landmark 1998 legal settlement with Big Tobacco. The payments are to go on forever as long as people smoke.
Much of the money, however, doesn't go to government coffers anymore. As ProPublica reported last month, a large chunk now flows to investors - the result of deals that politicians and Wall Street bankers arranged to get cash up-front by trading away the tobacco income decades into the future.
How much are investors getting? About 44 percent, or nearly one in every two dollars the tobacco companies pay out each year, an updated analysis by ProPublica shows.
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The figure incorporates new data from California and New York counties and cities that also share tobacco settlement money. It updates our earlier estimate that at least one in three dollars goes to investors who bought bonds used to "securitize" the money coming in. See "How Tobacco Bonds Work."
Until now, it has been unclear how much money has been tied up in securitizations. The deals aren't tracked by the National Association of Attorneys General, which monitors the payments. State and local officials aren't required to report how they spend the money.
This year, investors were pledged $2.6 billion of the $6 billion paid out by tobacco companies. Forty-six states, five territories and the District of Columbia get a share under the terms of the 1998 settlement, which grew out of a multi-jurisdictional lawsuit over the cost of illnesses caused by smoking.
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California and New York are unique in that, unlike the other states party to the settlement, they share their settlement proceeds with county governments and some cities.
All told, 35 New York counties, plus New York City, and 24 California counties and the City of San Diego have securitized all or a portion of their settlement dollars as of 2014, according to bond documents reviewed by ProPublica and interviews with dozens of county officials.