The state didn't have the right to take about $230 million set aside for tobacco prevention and use it for other purposes because the money was in a protected fund, a lawyer for an anti-smoking group told the Ohio Supreme Court on Tuesday.
At issue is whether lawmakers in 2008, who tapped the money for other health programs, could go back on the intent of lawmakers eight years earlier.
"The fact in evidence here is that the 123rd General Assembly plainly intended to create an irrevocable trust putting this money beyond the reach of subsequent general assemblies," John Zeiger, a lawyer representing the state Tobacco Use Prevention and Control Foundation, told the justices.
Zeiger argued that the state has created similar trusts in state employee retirement funds that are also off limits to lawmakers.
A state lawyer disagreed, telling the court that the foundation was a state agency whose operations were not protected from the actions of future lawmakers.
"This money is and has always remained state money. It has never been given to any entity that has any legal independence from the state," said Alexandra Schimmer, chief deputy solicitor general. "All there is is state to state, apples to apples."
Schimmer said it would have taken a constitutional amendment, similar to one that directs lottery profits to schools, to protect the use of the money.
Several national groups are urging the court to reverse the state's 2008 action. They include the American Heart Association, the American Lung Association, the American Cancer Society and the Campaign for Tobacco-Free Kids.
But the national impact of the court's ultimate decision will be difficult to measure, since states have taken different approaches to creating funds for tobacco dollars, said Ellen Vargyas, a lawyer representing the American Legacy Foundation, which received about $190 million of the funding.
Ohio received about $10 billion from states' 1998 settlement with major tobacco companies.
Lawmakers originally wanted to use the tobacco money as part of a $1.57 billion economic stimulus package approved in 2008. But a lawsuit prevented it from doing so.
Lawmakers then diverted the money in the latest two-year budget to expand children's health insurance and provide optional dental and vision coverage through Medicaid.
The 10th District Court of Appeals in Columbus upheld the state's action earlier this year.