MISSISSIPPI LEGISLATURE

2026 Regular Session

To: Public Health and Human Services; Appropriations A

By: Representative Scott

House Bill 663

AN ACT TO REENACT AND AMEND SECTION 43-13-405, MISSISSIPPI CODE OF 1972, WHICH WAS REPEALED BY OPERATION OF LAW IN 2017, TO ESTABLISH THE HEALTH CARE TRUST FUND IN THE STATE TREASURY, INTO WHICH SHALL BE DEPOSITED ALL TOBACCO SETTLEMENT INSTALLMENT PAYMENTS MADE TO THE STATE EXCEPT AS OTHERWISE PROVIDED IN SECTION 41-113-11; TO PROVIDE THAT THE TRUST FUND SHALL REMAIN INVIOLATE AND SHALL NEVER BE EXPENDED, EXCEPT AS OTHERWISE PROVIDED BY LAW; TO AMEND SECTION 43-13-407, MISSISSIPPI CODE OF 1972, TO CONFORM TO THE PRECEDING SECTION; TO BRING FORWARD SECTION 41-113-11, MISSISSIPPI CODE OF 1972, TO WHICH CREATED THE TOBACCO CONTROL PROGRAM FUND, FOR THE PURPOSE OF POSSIBLE AMENDMENT; TO DIRECT THE STATE TREASURER, IN CONJUNCTION WITH THE STATE FISCAL OFFICER, TO TRANSFER THE SUM OF ONE BILLION DOLLARS FROM THE CAPITAL EXPENSE FUND TO THE HEALTH CARE TRUST FUND; AND FOR RELATED PURPOSES.

     WHEREAS, in 1994, the Mississippi Attorney General filed a landmark lawsuit against the tobacco industry to recoup funds spent by the State of Mississippi to treat smoking-related illnesses, and in 1997 the lawsuit was settled, which guaranteed the State of Mississippi $4 Billion over the first 25 years with annual payments of $100 Million or more continuing in perpetuity; and

     WHEREAS, in 1999, the Legislature enacted House Bill No. 519, which created the Health Care Trust Fund for the deposit of all monies received from the tobacco industry as a result of the tobacco settlement, with a long-term vision of having an ever-growing source of money to spend on health care in Mississippi for generations to come; and

     WHEREAS, House Bill No. 519 mandated that the trust fund "shall be inviolate and shall never be expended" except as allowed in the bill, and the expectation was that the principal of the trust fund would continue to increase year by year from the annual settlement payments and investment earnings, and the Legislature would expend only those earnings exclusively for health care purposes in the state while leaving the principal untouched; and

     WHEREAS, however, not long after the creation of the trust fund, the Legislature slowly began to break the initial promise of the trust fund, as it began transferring monies from the fund to fill holes in the budget, and in 2005 passed legislation to take $240 Million from the trust fund to cover a Medicaid deficit, along with a commitment to replenish that amount to the trust fund; and

     WHEREAS, each year legislators and the Governor balked at making the repayments to the trust fund while at the same time whittling away more and more money from the fund to pay for other pressing budget matters, and the Legislature never did repay the trust fund for those monies and it ultimately repealed the pledge to make the repayments; and

     WHEREAS, when Governor Haley Barbour took office in 2004, there was more than $630 Million in the fund, but when he left office in 2012, the fund had dwindled to only $50 Million, and at the recommendation of the Governor, who said it was clear that the trust fund was never going to be used the way it was envisioned, the Legislature enacted a four-year schedule to fully deplete the fund and then repealed the fund a few years later; and

     WHEREAS, while a lot of the money received from the tobacco settlement was expended for health care purposes, and the State of Mississippi still receives an annual payment from the tobacco settlement that is expended for a variety of health care purposes, the original vision and promise of having an inviolate trust fund that would grow to a massive amount and provide a perpetual continuous source of money for health care has been lost; and

     WHEREAS, Mississippi continues to have major health care issues that could have been addressed in part with monies from the trust fund, so the Legislature should take action to restore that vision and expectation of 1999 by reestablishing the Health Care Trust Fund and transferring a substantial sum into the trust fund to provide a new principal that can be invested and provide a new source of funds to be used for improving the health care in the state; NOW, THEREFORE,

     BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

     SECTION 1.  Section 43-13-405, Mississippi Code of 1972, which was repealed by operation of law in 2017, is reenacted (and amended) as follows:

     43-13-405.  (1)  In accordance with the purposes of this article, there is established in the State Treasury the Health Care Trust Fund, into which shall be deposited Two Hundred Eighty Million Dollars ($280,000,000.00) of the funds received by the State of Mississippi as a result of the tobacco settlement as of the end of fiscal year 1999, and all tobacco settlement installment payments made in subsequent years for which the use or purpose for expenditure is not restricted by the terms of the settlement, except as otherwise provided in * * *Section 43‑13‑407(2) and (3) and Section 41-113-11.  All income from the investment of the funds in the Health Care Trust Fund shall be credited to the account of the Health Care Trust Fund.  The funds in the Health Care Trust Fund at the end of a fiscal year shall not lapse into the State General Fund.

     (2)  The Health Care Trust Fund shall remain inviolate and shall never be expended, except as provided in this article.  The Legislature shall appropriate from the Health Care Trust Fund such sums as are necessary to recoup any funds lost as a result of any of the following actions:

          (a)  The federal Centers for Medicare and Medicaid Services, or other agency of the federal government, is successful in recouping tobacco settlement funds from the State of Mississippi;

          (b)  The federal share of funds for the support of the Mississippi Medicaid Program is reduced directly or indirectly as a result of the tobacco settlement;

          (c)  Federal funding for any other program is reduced as a result of the tobacco settlement; or

          (d)  Tobacco cessation programs are mandated by the federal government or court order.

     SECTION 2.  Section 43-13-407, Mississippi Code of 1972, is amended as follows:

     43-13-407.  (1)  In accordance with the purposes of this article, there is established in the State Treasury the Health Care Expendable Fund, into which shall be transferred from the Health Care Trust Fund * * *the following sums:

  (a)  In fiscal year 2005, Four Hundred Fifty‑six Million Dollars ($456,000,000.00);

  (b)  In fiscal year 2006, One Hundred Eighty‑six Million Dollars ($186,000,000.00);

  (c)  In fiscal year 2007, One Hundred Eighty‑six Million Dollars ($186,000,000.00);

  (d)  In fiscal year 2008, One Hundred Six Million Dollars ($106,000,000.00);

  (e)  In fiscal year 2009, Ninety‑two Million Two Hundred Fifty Thousand Dollars ($92,250,000.00);

  (f)  In the fiscal year beginning after the calendar year in which none of the amount of the annual tobacco settlement installment payment will be deposited into the Health Care Expendable Fund as provided in subsection (3)(d) of this section, and in each fiscal year thereafter, a sum equal to the average annual amount of the dividends, interest and other income, including increases in value of the principal, earned on the funds in the Health Care Trust Fund during the preceding four (4) fiscal years.

 * * * (2)  In any fiscal year in which interest, dividends and other income from the investment of the funds in the Health Care Trust Fund are not sufficient to fund the full amount of the annual transfer into the Health Care Expendable Fund as required in subsection (1)(f) of this section, the State Treasurer shall transfer from tobacco settlement installment payments an amount that is sufficient to fully fund the amount of the annual transfer.

(3)  Beginning with calendar year 2009, at the time that the State of Mississippi receives the tobacco settlement installment payment for each calendar year, the State Treasurer shall deposit the following amounts of each of those installment payments into the Health Care Expendable Fund:

  (a)  In calendar years 2009 and 2010, the total amount of the installment payment;

  (b)  In calendar year 2011, the amount of the installment payment less Ten Million Dollars ($10,000,000.00);

  (c)  In calendar years 2012, 2013 and 2014, the total amount of the installment payment;

  (d)  In calendar year 2015, and each calendar year thereafter, the total amount of the installment payment. (4)  (a)  In addition to any other sums required to be transferred from the Health Care Trust Fund to the Health Care Expendable Fund, the sum of One Hundred Twelve Million Dollars ($112,000,000.00) shall be transferred from the Health Care Trust Fund to the Health Care Expendable Fund in fiscal year 2011.

          (b)  In addition to any other sums required to be transferred from the Health Care Trust Fund to the Health Care Expendable Fund, the sum of Fifty‑six Million Two Hundred Sixty‑three Thousand Four Hundred Thirty‑eight Dollars ($56,263,438.00) shall be transferred from the Health Care Trust Fund to the Health Care Expendable Fund during fiscal year 2012.

          (c)  In addition to any other sums required to be transferred from the Health Care Trust Fund to the Health Care Expendable Fund, the sum of Ninety‑seven Million Four Hundred Fifty Thousand Three Hundred Thirty‑two Dollars ($97,450,332.00) shall be transferred from the Health Care Trust Fund to the Health Care Expendable Fund during fiscal year 2013.

          (d)  In addition to any other sums required to be transferred from the Health Care Trust Fund to the Health Care Expendable Fund, the sum of Twenty‑three Million One Hundred Thousand Dollars ($23,100,000.00) shall be transferred from the Health Care Trust Fund to the Health Care Expendable Fund during fiscal year 2014.

          (e)  The State Fiscal Officer shall transfer the entire balance in the Health Care Trust Fund to the Health Care Expendable Fund during fiscal year 2015.

     (5)  If Medicaid expenditures are projected to exceed the amount of funds appropriated to the Division of Medicaid in any fiscal year in excess of the expenditure reductions to providers, funds shall be transferred by the State Fiscal Officer from the Health Care Trust Fund into the Health Care Expendable Fund and then to the Governor's Office, Division of Medicaid, in the amount and at such time as requested by the Governor to reconcile the deficit.

     ( * * *62)  All income from the investment of the funds in the Health Care Expendable Fund shall be credited to the account of the Health Care Expendable Fund.  Any funds in the Health Care Expendable Fund at the end of a fiscal year shall not lapse into the State General Fund.  Any funds appropriated from the Health Care Expendable Fund that are unexpended at the end of a fiscal year shall lapse into the Health Care Expendable Fund.

     ( * * *73)  The funds in the Health Care Expendable Fund shall be available for expenditure under specific appropriation by the Legislature * * *beginning in fiscal year 2000, and shall be expended exclusively for health care purposes.

     ( * * *84)  The provisions of subsection (1) of this section may not be changed in any manner except upon amendment to that subsection by a bill enacted by the Legislature with a vote of not less than three-fifths (3/5) of the members of each house present and voting.

     ( * * *95)  If the State Treasurer, in consultation with the Executive Director of the Department of Finance and Administration, determines that there is a need to borrow funds to offset any temporary cash-flow deficiencies in the Health Care Expendable Fund created in this section, the Treasurer may borrow those funds from any state-source special funds in the State Treasury in amounts that can be repaid from the Health Care Expendable Fund during the fiscal year in which the funds are borrowed.  The State Treasurer shall immediately notify the Legislative Budget Office and the Department of Finance and Administration of each transfer into and out of the Health Care Expendable Fund.

 * * * (10)  No later than September 30, 2011, the State Treasurer shall transfer from the Health Care Expendable Fund to the Health Care Trust Fund an amount equivalent to the unencumbered ending cash balance of the Health Care Expendable Fund as of June 30, 2011, less Three Million Eight Hundred Forty Thousand Dollars ($3,840,000.00).

     SECTION 3.  Section 41-113-11, Mississippi Code of 1972, is brought forward as follows:

     41-113-11.  (1)  There is established in the State Treasury a special fund to be known as the Tobacco Control Program Fund, which shall be comprised of the funds specified in subsection (2) of this section and any other funds that are authorized or required to be deposited into the special fund.

     (2)  From the tobacco settlement installment payments that the State of Mississippi receives during each calendar year, the sum of Twenty Million Dollars ($20,000,000.00) shall be deposited into the special fund.

     (3)  Monies in the fund shall be expended solely for the purposes specified in this chapter.  None of the funds in the special fund may be transferred to any other fund or appropriated or expended for any other purpose.

     (4)  All income from the investment of the funds in the Tobacco Control Program Fund shall be credited to the account of the Tobacco Control Program Fund.  Any funds in the Tobacco Control Program Fund at the end of a fiscal year shall not lapse into the State General Fund.  Any funds appropriated from the Tobacco Control Program Fund that are unexpended at the end of a fiscal year shall lapse into the Tobacco Control Program Fund.  However, beginning with fiscal year 2020, any funds appropriated from the Tobacco Control Program Fund that are unexpended at the end of the fiscal year shall lapse into the Health Care Expendable Fund.

     SECTION 4.  On July 1, 2026, the State Treasurer, in conjunction with the State Fiscal Officer, shall transfer the sum of One Billion Dollars ($1,000,000,000.00) from the Capital Expense Fund (Fund No. 6499C00000) to the Health Care Trust Fund established in Section 43-13-405 as reenacted in Section 1 of this act.

     SECTION 5.  This act shall take effect and be in force from and after July 1, 2026.

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