Minnesota will appeal a court ruling that struck down a 75-cents-per-pack wholesale fee on cigarettes that was expected to raise US$ 400 million for the current two-year state budget, according to the governor.

"We are very disappointed by the court's ruling and will ask for an immediate appeal directly to the Minnesota Supreme Court," said Gov. Tim Pawlenty in a statement released Tuesday.
A Ramsey County District Court judge ruled Tuesday that the so-called health impact fee violated a 1998 settlement between the state and tobacco companies meant to reimburse Minnesota for the cost of caring for sick smokers.
Philip Morris USA, a unit of Altria Group, filed a challenge to the fee in August. The cigarette maker said the court found the legislation creating the fee violated constitutional provisions that prohibit the impairment of contracts.
Still, Pawlenty said the ruling ignored the separation of powers principle that would allow the legislature to make decisions not bound by prior agreements reached by the state's attorney general. He added that he will consider applying the fee on cigarettes at the retail level, saying that move was "clearly allowed”.
The 1998 agreement between Minnesota, Philip Morris and other cigarette makers was to provide more than US$ 6 billion to the state. Minnesota was one of a handful of states to enter into separate agreements with tobacco companies, while the rest of the states entered into a joint US$ 206 billion settlement. (pi)