WASHINGTON -- States like Washington continued to use money from the 1998 settlement with cigarette companies to plug holes in their budgets last year but planned to spend a greater percentage of that money on health-related programs in 2005, according to congressional auditors.

A report released Tuesday by the Government Accountability Office showed 46 states received about $9.7 billion through the Master Settlement Agreement in 2004, and used the largest portion -- 44 percent -- to address budget shortfalls.

About 20 percent was spent on health-related programs, according to the GAO, the investigative and auditing arm of Congress.

At the time of the $206 billion settlement, state officials said the goal was to recover the cost of treating sick smokers, but the agreement does not restrict how the money must be spent.

Washington state Gov. Christine Gregoire, then Washington's attorney general, was a principal architect of the agreement, negotiating on behalf of the states.

In 2005, states planned to allocate the largest portion of the settlement money -- 32 percent -- to health care, but a drop in the amount coming in means fewer dollars may go to such programs, the GAO reported.

The states were expected to receive $5.4 billion through the settlement in 2005. They planned to spend just 11 percent of that on budget shortfalls, the report said.

The settlement requires cigarette companies to make annual payments to 46 states, the District of Columbia and five U.S. territories as reimbursement for health care costs related to tobacco use. Each state's share of the payout is based on a percentage fixed in the agreement.

Congress included a provision in the 2002 farm bill requiring the GAO to examine annually how the states that joined the settlement spend the money they receive.


> On the Net:

Government Accountability Office report: http://www.gao.gov/new.items/d05312.pdf

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