WASHINGTON (Reuters) - Feeling the pinch of the U.S. economic recession, state officials are using money from a $246 billion national tobacco settlement to plug budget holes rather than fund anti-smoking programs, according to a study released on Tuesday.

The latest in a series by the Campaign for Tobacco-Free Kids, the American Cancer Society, the American Heart Association and the American Lung Association, the report blasted states for failing to use the 1998 legal settlement money to combat tobacco use. "These are penny-wise, pound-foolish decisions that ignore the conclusive evidence that tobacco prevention programs not only reduce smoking and save lives but also save far more than they cost by reducing smoking-caused health care expenditures," the report said. It put the annual cost of treating tobacco-related diseases at more than $89 billion. The report named Florida and Tennessee as particularly stark examples of the trend, noting that funding for what it deemed a highly successful $37.3 million program in Florida had been slashed by 20 percent in December. Tennessee legislators in August ignored protests by Gov. Don Sundquist and voted to use all available tobacco money to cover annual expenses. Tourist-dependent Florida was hit by a travel slump after the Sept. 11 attacks and efforts to raise taxes in Tennessee were blocked by protesters who broke windows at the governor's office in July. While those problems are among the extreme, many more state governments are struggling to make ends meet. The National Conference of State Legislatures said in December, halfway through fiscal 2002 for most jurisdictions, that 43 states were reporting revenues below forecasts. Tuesday's study said only five states -- Arizona, Maine, Massachusetts, Mississippi and Minnesota -- were funding tobacco prevention programs at the minimum level recommended by the Center for Disease Control and Prevention. Only 19 states including those five had committed even half of CDC's recommended minimum. The report said tobacco use accounted for 400,000 deaths annually in the U.S. -- more, it claims, than AIDS, alcohol, car accidents, murders, suicides, illegal drugs and fires combined. Under the 1998 settlement, tobacco companies agreed to pay 46 states $206 billion over 25 years. Four other states settled tobacco lawsuits separately for a total of $40 billion over 25 years.

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