Nevada received a payment of $38 million from the tobacco industry to cover its share of a settlement that ended cigarette litigation by states in 1998.
The amount the state received Tuesday for 2004 was less than the $43 million it projected to get when former Attorney General Frankie Sue Del Papa signed the agreement six years ago.
"There is less smoking," Deputy Attorney General John Albrecht said of the difference. "The settlement was based on total national sales."
Tobacco companies agreed to compensate 46 states for Medicaid payments covering tobacco-related illnesses for the indigent, blind and elderly.
Nevada was initially projected to receive $1.2 billion over 27 years, with annual payments after a phase-in period estimated at $48 million a year.
The state uses the payments to fund a Millennium Scholarship program, prescription drug and assisted-living programs for senior citizens, and efforts to prevent and treat tobacco-related illnesses, Attorney General Brian Sandoval said.
Because of the drop in tobacco revenue, the Legislature last year raised from 3.0 to 3.1 the grade-point average high school students need to qualify for a $10,000 Millennium Scholarship to attend college in Nevada.
The grade point average threshold will rise again to 3.25 in 2007 and later years.
State Treasurer Brian Krolicki said Tuesday that falling cigarette sales could cost Nevada $100 million in projected revenue over the life of the settlement.
Krolicki tried unsuccessfully during the 2003 Legislature to win approval of an investment plan to fully fund the scholarship program.