By TIM THORNBERRY
Kentucky Correspondent

FRANKFORT, Ky. — Kentucky farmers may have the chance to apply for more funds from the Master Settlement Agreement (MSA), commonly referred to as Phase I funds, due to an unexpected increase in the amount the state received this year.

On April 23, Gov. Ernie Fletcher said the Kentucky Agricul-tural Development Fund (ADF) received an additional $9.1 million from the state’s share of the MSA for the current fiscal year.

In total, Kentucky received $107 million, or $18.2 million more than originally budgeted. Forecasters predicted Kentucky’s share would be lower due to multiple legal challenges and disputes by tobacco companies over contributions this year.

Reasons for the unexpected income included complete payments from tobacco companies that had previously indicated they would withhold part of their 2007 payment.

Additionally, there were settlement payments from nationwide lawsuits, and estimates for decreases in cigarette consumption nationwide were conservative.

The 2007 budgeted amount of ADFs for county allocation was $15.5 million (the funds are distributed to 118 of the state’s 120 counties).

With an additional $3.1 million, they are now going to receive a total of $18.6 million.

Additionally, the 2007 MSA funds set aside for state-level projects was budgeted at $2 million.

The additional funds provide a total of $7.9 million for investment in new and innovative diversification projects.

The Kentucky Agricultural Develop-ment Board (KADB) was created in 2000 by the Kentucky General Assembly to distribute MSA funds.

The funds are directed toward proposals that increase net farm income and affect tobacco farmers, tobacco-impacted communities and agriculture across the state by way of diversification projects.

While 50 percent of the total yearly allocation goes to the KADB, the other half is divided equally between early childhood development and heath care improvement programs.

Joel Neaveill, deputy director of administration for the Governor’s Office of Agricultural Policy (GOAP) that oversees the KADB, makes sure funds are placed in the appropriate places by the time they get to his agency.

“The 50 percent of the MSA funds we receive are divided, with 35 percent deposited into the county funds account and 65 percent going for statewide projects; however, the law allows for some direct appropriations that include some legislatively-mandated projects with an agricultural connection,” he said.

Keith Rogers, executive director of GOAP, said additional money will mean a boost for diversification projects.

“The increase in the April MSA payment is great news for Kentucky’s farmers and will provide a tremendous boost in the resources available for continuing our agricultural diversification efforts,” Rogers said. “Kentucky agriculture has come a long way since the first funding was approved by the Agricultural Development Board six years ago.

“With these additional unexpected funds, counties will be able to continue programs at a level similar to last year, and the proactive efforts of the Agricultural Development Board in areas such as marketing, education and renewable energy can continue.”

Sam Moore has served on the KADB since its inception and said the extra funding came at a good time. “This was a pleasant surprise and very timely,” he said. “The fund was going to be short this year, and this will bring us back to a more normal level and hopefully help to move Kentucky agriculture forward.”

Attorneys General from 46 states signed the original MSA in 1998 to settle state lawsuits that sought to recover billions of dollars in costs associated with smoking-related illnesses. The settlement included restrictions on the advertising, marketing and promotion of cigarettes.

According to the National Association of Attorneys General, “the central purpose of the MSA was to reduce smoking, and particularly youth smoking in the United States. Since 1997, when the first state settlement was announced, cigarette sales in the United States have fallen by more than 21 percent.

“Cigarette sales in 2005 declined by 4.2 percent from 2004 levels, marking the largest one-year percentage decrease in cigarette sales since 1999. The 378 billion cigarettes sold in the United States in 2005 represented the lowest number of cigarettes sold in the United States since 1951, when the U.S. population was less than half of what it was in 2005.”

This farm news was published in the May 2, 2007 issue of Farm World, serving Indiana, Ohio, Illinois, Kentucky, Michigan and Tennessee.