NEW YORK (Reuters) - With Americans smoking fewer cigarettes, New York State has cut its forecast on the biannual payments it expects to receive from the national tobacco settlement to $247 million from last year's projection of $315 million, the state at

In a letter to municipalities around the state sent on Wednesday, Attorney General Eliot Spitzer said the payout dropped to account for a $30 million overpayment earlier in the year after the settlement's pay schedule was adjusted to account for declining tobacco consumption. ``It's not a surprise,'' said Sheila Amoroso, a tax-exempt mutual fund manager who has bought bonds backed by payments from the MSA for Franklin Templeton Investments. Buyers of the bonds, ``expected a 50 percent decline in smoking over the period of the settlement,'' she added, noting that all of the $2.5 billion in outstanding tobacco settlement- backed bonds sold in the last 2 years were over-collateralized in expectation of a decline in cigarette sales. The 1998 Master Settlement Agreement between the four major tobacco companies and 46 states requires cigarette manufacturers to pay an estimated $206 billion over the next 25 years because they did not tell consumers about health risks associated with tobacco usage. Spitzer's office currently projects that New York will receive $25 billion over the first 25 years of the settlement. The payment is not due until Jan. 10, but the tobacco industry will be making the payment early for the second consecutive year. The payment, scheduled to enter state coffers nationwide on Dec. 29, will be the fourth to New York. The state has received payments totaling $1.277 billion.

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