TALLAHASSEE, Fla., April 4 (Reuters) - Florida's Senate on Tuesday set a three-week deadline for lawmakers to explore ways to protect the state's $450-million-a-year tobacco settlement from the potentially devastating effects of a Miami smokers trial.

State lawmakers debated whether to cash in now on future payments from a landmark 1997 settlement with the tobacco industry as jurors in the Engle sick smokers case heard closing arguments in a case that experts have said could result in crippling punitive damages of $300 billion or more. The potential size of damages in the Engle case, a class- action on behalf of thousands of smokers who say their diseases were caused by smoking, has tobacco analysts and state officials worried that the faltering industry could slide toward bankruptcy, cutting off the lucrative settlement cash flow to governments. ``The long-term prospects for the tobacco companies in the United States are not good, whether it is the Engle case or the next case,'' said Sen. Locke Burt, an Ormond Beach Republican. Florida expects to receive between $400 million and $500 million a year over 30 years from a landmark $13 billion settlement reached with cigarette makers in 1997 in a state lawsuit that sought to recover the state Medicaid costs of treating sick smokers. Senate leaders said they would appoint a joint legislative committee to study the issue and return with a slate of recommendations by April 20, with a legislative proposal drafted by April 24. The committee will be asked to explore options including buying insurance, passing legislation to insulate cigarette makers from devastating awards, or selling off some or all of the settlement's future proceeds at current value. The concept of protecting the same industry the state so recently sued was unsettling to some senators, who argued that the state should act slowly and deliberately. ``The Engle case is coming to a conclusion and all of a sudden the state of Florida and other states are now scurrying because the industry is going out to the press and state legislators and saying: 'Folks, now you have to save us because we are your cash cow,''' said Democratic Senator Skip Campbell. ``I find that to be offensive.''

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