Minnesota Supreme Court upholds tobacco fee
The Minnesota Supreme Court on Tuesday upheld the constitutionality of a state health impact fee on cigarettes that tobacco companies were challenging.
The high court reversed a Ramsey County District Court ruling in December that found the fee violated a 1998 settlement between the state and tobacco companies meant to reimburse Minnesota for the cost of caring for sick smokers.
"Because we construe the settlement agreement not to waive the legislature's authority to enact future legislative revenue measures to recover health care costs, the enactment of the health impact fee did not impair that agreement and therefore did not violate the contract clause," the court said.
Philip Morris USA, a unit of Altria Group Inc., R.J. Reynolds Tobacco Company, a unit of Reynolds American Inc., and other tobacco companies filed suit in August claiming legislation creating the 75-cents-per-pack fee violated constitutional provisions that prohibit the impairment of contracts.
David Howard, an R.J. Reynolds spokesman, said the company was disappointed with the ruling and will consider "any and all options" after reviewing it.
Gov. Tim Pawlenty, who originally proposed the fee, scheduled a news conference on the ruling for later Tuesday.
The fee was expected to raise about $400 million for the state's current two-year budget.
The 1998 agreement between Minnesota, Philip Morris and other cigarette makers was to provide more than $6 billion to the state. Minnesota was one of a handful of states to enter into separate agreements with tobacco companies, while the rest of the states entered into a joint $206 billion settlement.
