Cigarette makers agreed in 1998 to pay up to $2 billion to Iowa over 25 years. In 2002, the state sold off the rights to most of those payments for about $500 million in immediate cash. The plan then was to funnel the money into a standing fund whose earnings would pay for anti-smoking campaigns, cancer treatment and other tobacco-related expenses. But the state hit hard budget times, and legislators dipped into the fund for other needs, critics say.

Former Republican state Sen. Jeff Lamberti of Ankeny help put together the deal for the trust fund. Lamberti says there was talk of the tobacco companies going into bankruptcy to avoid paying some of the settlement, so the lump sum deal made sense.

“The model was good other states were doing it. I think in hindsight the thing we’ve learned is if government has an unrestricted pot of money to spend they will spend it and that’s unfortunate because I think the model was the right model for us to do,” Lamberti says.

American Cancer Society lobbyist Cathy Calloway said the idea that cigarrette companies were going to go bankrupt was always “preposterous.” She now worries about finding funding for tobacco prevention and programs to help people stop smoking. Her group opposed the 2002 sale of future payments.

Sen. Jack Hatch, D-Des Moines, said the money had to be used to fund rapidly increasing health care costs.

“So this is going to happen, it’s not that were spending the money wrong we just don’t have enough of it to spend,” Hatch says.