New Mexico could lose $40 million a year in tobacco settlement money if Gov. Susana Martinez doesn't sign a bill virtually identical to one she vetoed last year, a lobbyist for a major cancer charity said Tuesday.

Supporters say Senate Bill 225, sponsored by Sen. Linda Lovejoy, D-Crownpoint, is designed to clarify what they -- as well as "Big Tobacco" -- believe is a loophole in the 1998 settlement between states and cigarette companies. Lovejoy's bill passed the recently concluded Legislature with bipartisan support.

"This is money already owed to the state, payable by tobacco companies," said Nathan Bush of the American Cancer Society Cancer Action Network, referring to the money paid under the settlement. "I'd hate to see that money returned to the bad actors who caused health care damages here in the state. Lifesaving cancer screening and tobacco control programs in New Mexico are depending on us receiving that money and defending the integrity of the [settlement]."

However, Martinez spokesman Scott Darnell said Tuesday that the situation is not that dire. He said the governor has not changed her view on the law. And, he added, the governor hasn't changed her view of a similar bill last year that she vetoed.

The 2011 bill, also sponsored by Lovejoy, amounted to "imposing a tax on small cigarette manufacturers," Martinez said in her veto message last year.

In the tobacco settlement agreement, there is a requirement that cigarette manufacturers that aren't parties to the settlement set aside part of their sales in an escrow account. The escrow payments are supposed to be in an amount proportionate to the payments made to the state by the companies that are involved in the agreement.

The settlement agreement allows the participating tobacco companies -- which include the largest tobacco companies -- to reduce their annual payments to any state that doesn't adequately enforce their escrow laws related to the nonparticipating companies.

The trouble, Bush said, is that some of the nonparticipating companies aren't reporting sales made on Indian land. These companies argue that the definition of "units sold" in current state statute doesn't apply to them for cigarettes sold in stores on tribal land.

Meanwhile, the big companies are claiming that sales of cigarettes from the smaller, nonparticipating manufacturers are cutting into their market shares.

The big companies are currently in federal arbitration with the states -- including New Mexico -- over this issue. Big Tobacco, Bush said, is arguing "that New Mexico is unwilling or unable to properly regulate tribal sales."

A fiscal impact report for the bill cites the Attorney General's Office, saying SB 225 "will help to ensure that the state collects escrow on all cigarette sales in New Mexico."

The attorney general estimates that escrow money collected from the nonparticipating companies without SB 225 would be about $100,000 to $400,000 annually. But with the bill, that sum would increase to about $8 million, the report said.

Darnell said Martinez is reviewing every bill before taking final action. But he noted that the state Taxation and Revenue Department doesn't feel SB 225 is necessary for the attorney general to be able to enforce the agreement. "The AG has taken enforcement actions under current law," he said.

Bush said, "If she does not sign SB 225, she should be aware that the participating companies have plans to use that loophole to ask for a refund of their money."

According to the attorney general's website, there are more than 50 companies that are participants in the tobacco settlement. The site lists 14 companies that are allowed to sell cigarettes in the state but are not part of the settlement.

Contact Steve Terrell at 986-3037 or sterrell@sfnewmexican.com. Read his political blog at roundhouseroundup.com.