Who We Are

The Authority is a single-purpose entity created by the state in 2002. It makes decisions relating to the issuance and ongoing compliance of the bonds that are backed by the state's tobacco settlement funds. Washington is one of the many states receiving annual payments from tobacco manufacturers from the 1998 settlement of the national tobacco litigation.



Finance Team



Senate Bill 6828, passed as part of the state of Washington’s 2001-2003 biennial budget, established the Tobacco Settlement Authority (“TSA”) to which the state sold a portion of the state's tobacco settlement revenues due under the national tobacco litigation settlement agreement. The state sold a portion of its revenues to the TSA in order to receive an up-front, lump sum amount of $450 million. The TSA funded the purchase of the revenue stream from the state by “securitizing” the revenues with a bond sale. Securitization is a common financial transaction by which a stream of future revenue is sold or assigned to a third party, in exchange for a cash payment. Many other states and local governments have generated revenue by securitizing all or a portion of their tobacco revenues.

In 2013 the Authority refunded its outstanding 2002 bonds, issuing $334.7 million in refunding bonds in order to refund all of its outstanding Series 2002 Bonds. The refunding generated an estimated present value savings of $58.2 million to the Authority and shortened the expected final maturity of the 2002 bonds by two years. This is estimated to return $89.9 million more in tobacco settlement revenues to the state over the life of the refunding bonds than would have been returned under the 2002 bonds.

The refunding presented the Authority with an opportunity to reduce the payments of the Authority, to use fewer tobacco settlement revenues than the 2002 bond issue would require, and to retire the refunded bonds earlier than the 2002 bonds. This will return more tobacco revenue to the state earlier than had been anticipated and allow those funds to be put to other uses.

Washington is one of the many states receiving annual payments from tobacco manufacturers from the 1998 settlement of the national tobacco litigation. Washington Attorney General Christine Gregoire served as the lead negotiator for states in the settlement of state lawsuits against the tobacco industry. The state is scheduled to receive these payments in perpetuity, but the TSA will receive a portion of the payments only as long as its Series 2013 bonds (or any related refunding bonds) remain outstanding.

Payment on the TSA’s bonds is an obligation only of the Tobacco Settlement Authority and not an obligation of the state of Washington. Neither the faith and credit nor the taxing power of the state of Washington or any municipal corporation, subdivision or agency of the state is pledged to the payment of the bonds.

Administrative and technical support for the Authority is provided by the Washington State Housing Finance Commission (the Commission), an existing state commission with extensive experience in the issuance of bonds. The Commission is reimbursed for its ongoing costs from the revenue stream purchased from the state. Accounting and staff services will be provided until the TSA’s bonds are no longer outstanding.

 Enabling Legislation and Rules

modified 05/20/2016

Washington State Tobacco Settlement Authority
1000 2nd Avenue, Suite 2700, Seattle, WA 98104
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