HELENA - In last minute finagling, lawmakers killed a proposal Thursday night to put 40 percent of Montana's tobacco cash into Medicaid because it would leave the state's budget too tight next session.

Earlier in the day, the House overwhelmingly agreed with the Senate to put an initiative to boost Montana's Medicaid program on the November ballot for voter approval. But after several members questioned how much the proposal would cost, both Republicans and Democrats agreed to reverse their previous actions and kill the bill several hours before adjournment. "It would restrict the things the next Legislature could do," House Speaker John Mercer, R-Polson, told the Republican caucus shortly before the House killed the proposal. The proposal would have caused a $7 million cash shortfall in the 2003 biennium, Mercer said. Although Senate Bill 12, by Sen. Bob Keenan, R-Bigfork, crumbled, its companion legislation survived. SB 13 will ask voters in November to place another 40 percent of the tobacco cash in a trust fund to pay for health related costs. The initiative's passage negates the need for volunteers to continue collecting voters signatures to get it on the ballot. Lawmakers can place initiatives on the ballot with 100 votes from a total of House and Senate members. These bills together created the potential funding problems for the next biennium. If voters would have approved both constitutional amendments, 80 percent of Montana's $922 million tobacco settlement would have been tied up for health care costs, leaving only 20 percent in the state checkbook and a $7 million deficient in 2003. The idea sounded great, especially to health care advocates, yet the reality made lawmakers question the fiscal feasibility especially when nobody can predict for certain how much cash the state will have in the next two years. Some legislators also argued changing the Montana Constitution to include specific programs such as Medicaid were dangerous. "It's too specific to put in the constitution," said Rep. Bob Raney, D-Livingston. Mercer agreed, saying it's better to put these mandates in law instead of the constitution. Most lawmakers involved praised the idea of using tobacco cash to leverage federal matching funds and said they should pursue it during the 2001 session. Under Keenan's failed proposal, he would have asked voters to change the Montana Constitution to allow 40 percent of the tobacco settlement to go toward Medicaid, the federal-state program providing health coverage for the poor and disabled. For each dollar Montana contributes to Medicaid, the federal government kicks in about $2.50 in matching cash. The proposal would have boosted the state's current $108 million contribution by $12 million annually to raise wages of nursing home workers, mental health provides and those who work with people with developmental disabilities. If lawmakers didn't want to use all the cash for Medicaid they could have put it toward other programs that leverage federal dollars with a two-thirds vote. "There's a saying if something sounds too good to be true, it is," said Rep. Loren Soft, R-Billings, who carried the measure in the House. Soft later said he and Keenan were disappointed but understood the budget constraints. He encouraged lawmakers to move ahead with the idea in January when the next Legislature convenes. "Don't lose sight of what Senator Keenan tried to do," Soft said. "It's something that can't be lost." Keenan said he believes the Legislature could have forged ahead with the Medicaid plan and are using budget constraints as an excuse. "I'll go in January and do what I can," Keenan said. Rose Hughes, Montana Health Care Association president, agreed the money was available to fund Medicaid and the problem won't go away, meaning the state will have to find cash somewhere to increase the severely underfunded entitlement program. Lawmakers were happy the trust fund ballot initiative is going to voters in November. For months, a coalition of groups has been carving out a way to create a permanent trust fund for a portion of the state's tobacco cash that would balance the need for immediate health care costs and future needs. Last month, the Alliance for a Healthy Montana, launched a petition drive to gather 40,000 voter signatures to qualify the trust fund idea on the November ballot. Democratic lawmakers wouldn't support Keenan's Medicaid proposal unless he included the trust fund initiative as well. Thursday's action voided the need for the petition drive, placing the initiative directly on the ballot. Jim Ahrens, coalition president, said it's a relief to stop pounding the streets for signatures. He said the group will now turn its efforts and cash toward getting voters to pass the constitutional amendment that would put 40 percent of the tobacco settlement cash into a permanent trust fund.

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