Tobacco Bonds May Be Dangerous to Your State’s Financial Health
After a bruising legal fight, tobacco companies agreed in 1998 to compensate 46 states, the District of Columbia and five U.S. territories for the health-related costs of smoking. Wall Street helped turn their annual payments into upfront cash by selling bonds to investors. Some of the deals included a form of high-risk debt, capital appreciation bonds, which obligated governments to pay out billions of their tobacco income in the future. Related: How Wall Street Tobacco Deals Left States With Billions in Toxic Debt
| State | Settlement Money Received in 2014 (millions) |
Portion of Settlement Receipts Pledged to Repay Bonds | Proceeds from Selling Tobacco Bonds That Are Still Outstanding (millions) |
Capital Appreciation Bonds, Amount Sold (millions) |
Capital Appreciation Bonds, Amount Owed (millions) |
Smoking Prevention Spending as Percentage of Settlement Receipts (FY 2014) |
|---|---|---|---|---|---|---|
| Alabama | $92.7 | Set at $13 million/year | $92.8 |
N/A |
N/A |
0.3% |
| Alaska | $32.3 | 80% | $412.0 | $12.1 | $137.3 | 31.3% |
| American Samoa | $2.1 |
N/A |
N/A |
N/A |
N/A |
N/A |
| Arizona | $100.5 |
N/A |
N/A |
N/A |
N/A |
18.5% |
| Arkansas | $50.0 | Set at $5 million/year | $96.8 |
N/A |
N/A |
35.0% |
| California * | $726.6 | 100% | $7,962.5 | $350.5 | $3,665.0 | 8.9% |
| Colorado | $100.4 |
N/A |
N/A |
N/A |
N/A |
25.9% |
| Connecticut | $96.0 |
N/A |
N/A |
N/A |
N/A |
3.1% |
| Delaware | $29.5 |
N/A |
N/A |
N/A |
N/A |
28.1% |
| District of Columbia | $38.0 | 100% | $769.4 | $248.3 | $4,424.3 | 1.3% |
| Florida |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
| Georgia | $139.3 |
N/A |
N/A |
N/A |
N/A |
1.6% |
| Guam | $2.5 | 100% | $37.0 | $3.4 | $115.5 |
N/A |
| Hawaii | $52.7 |
N/A |
N/A |
N/A |
N/A |
15.0% |
| Idaho | $27.5 |
N/A |
N/A |
N/A |
N/A |
8.0% |
| Illinois | $306.9 | 100% | $1,503.5 |
N/A |
N/A |
3.6% |
| Indiana | $67.4 |
N/A |
N/A |
N/A |
N/A |
8.6% |
| Iowa | $71.6 | 78% | $832.0 | $37.0 | $551.8 | 7.1% |
| Kansas | $62.2 |
N/A |
N/A |
N/A |
N/A |
1.4% |
| Kentucky | $48.3 |
N/A |
N/A |
N/A |
N/A |
4.3% |
| Louisiana | $139.9 | 60% | $659.7 |
N/A |
N/A |
5.7% |
| Maine | $56.4 |
N/A |
N/A |
N/A |
N/A |
14.4% |
| Maryland | $76.9 |
N/A |
N/A |
N/A |
N/A |
11.0% |
| Massachusetts | $282.1 |
N/A |
N/A |
N/A |
N/A |
1.4% |
| Michigan | $253.2 | 24% | $1,215.9 | $185.2 | $7,691.8 | 0.6% |
| Minnesota |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
| Mississippi |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
| Missouri | $66.1 |
N/A |
N/A |
N/A |
N/A |
1.2% |
| Montana | $33.1 |
N/A |
N/A |
N/A |
N/A |
16.3% |
| N. Mariana Islands | $1.7 |
N/A |
N/A |
N/A |
N/A |
N/A |
| Nebraska | $37.3 |
N/A |
N/A |
N/A |
N/A |
6.4% |
| Nevada | $40.0 |
N/A |
N/A |
N/A |
N/A |
2.5% |
| New Hampshire | $42.1 |
N/A |
N/A |
N/A |
N/A |
0.2% |
| New Jersey | $204.3 | 76% | $3,622.2 | $186.0 | $1,280.9 | 0.0% |
| New Mexico | $21.1 |
N/A |
N/A |
N/A |
N/A |
27.9% |
| New York * | $828.8 | 100% | $2,184.9 |
N/A |
N/A |
4.7% |
| North Carolina | $139.5 |
N/A |
N/A |
N/A |
N/A |
0.9% |
| North Dakota | $34.0 |
N/A |
N/A |
N/A |
N/A |
27.9% |
| Ohio | $331.1 | 100% | $5,531.6 | $319.5 | $6,624.3 | 0.5% |
| Oklahoma | $77.2 |
N/A |
N/A |
N/A |
N/A |
29.4% |
| Oregon | $86.9 |
N/A |
N/A |
N/A |
N/A |
11.4% |
| Pennsylvania | $233.3 |
N/A |
N/A |
N/A |
N/A |
2.1% |
| Puerto Rico | $71.9 | 100% | $1,475.3 | $304.1 | $11,124.6 |
N/A |
| Rhode Island | $51.8 | 100% | $882.4 | $197.0 | $2,834.2 | 0.8% |
| South Carolina | $90.5 |
N/A |
N/A |
N/A |
N/A |
5.5% |
| South Dakota | $26.6 | 100% | $169.6 |
N/A |
N/A |
15.0% |
| Tennessee | $137.4 |
N/A |
N/A |
N/A |
N/A |
3.6% |
| Texas |
N/A |
N/A |
N/A |
N/A |
N/A |
N/A |
| U.S. Virgin Islands | $2.2 | 100% | $29.0 | $7.3 | $48.2 |
N/A |
| Utah | $39.4 |
N/A |
N/A |
N/A |
N/A |
19.0% |
| Vermont | $37.3 |
N/A |
N/A |
N/A |
N/A |
10.5% |
| Virginia | $115.9 | 50% | $1,149.3 | $104.2 | $989.6 | 8.2% |
| Washington | $164.8 | 29% | $334.7 |
N/A |
N/A |
0.5% |
| West Virginia | $63.4 | 100% | $911.1 | $65.3 | $1,814.3 | 8.4% |
| Wisconsin | $145.7 |
N/A |
N/A |
N/A |
N/A |
3.6% |
| Wyoming | $17.0 |
N/A |
N/A |
N/A |
N/A |
30.0% |
Sources: National Association of Attorneys General, Thomson Reuters, Campaign for Tobacco Free Kids, Municipal Securities Rulemaking Board and Richard Larkin, analyst at Herbert J. Sims & Co.
* California and New York split their proceeds with cities and counties, who did their own tobacco deals. Those deals are excluded from the above totals.
** Capital appreciation bond data comprises turbo capital appreciation bonds, excluding serial and convertible issues
