The combined opposition against HB 131 resulted in a 42-57 defeat.In explaining her opposition to HB 131, Swanson explained that “Democrats believe it is more important to fund health care programs for Montanans than it is to give multinational corporations tax breaks,” and that Democrats wanted to send a message: “We didn’t want to go out of here saying we approved of any of it. That money was never intended for tax relief.”Swanson also gave indications that she believed MSA money could be more successfully allocated through other bills, and expressed confidence that MSA spending for tobacco use prevention and health care could be added to the bill that allocates the budget for all state government departments, House Bill 2.106 Indeed, Swanson would unsuccessfully attempt to achieve the same MSA allocations specified in HB 131 with another bill she sponsored, HB 240. Swanson would also propose allocations of MSA money for tobacco use prevention and health programs under HB 2, the state general allocation bill, would become one of most debated issues at the end of the 1999 session. The state Democratic and Republican parties became more polarized over the spending of MSA money, and the degree of cooperation between them further deteriorated, with the attempted passage of House Bill 240. HB 240, sponsored by House Minority Leader Emily Swanson would have created a 5-year tax credit for individual and small business employers as an incentive to provide health care to employees.Also within the bill, though it was not indicated in the bill’s title,flood tables for greenhouse was a provision specifying that “[f]unds deposited in the tobacco settlement trust fund account may be used only to provide refunds to employers providing health care benefits pursuant to [HB 240],” thereby excluding all other uses of MSA funds.
When the first hearing regarding HB 240 took place before the House Joint Select Committee on Jobs and Income on January 11, 1999, Swanson’s description of the bill and all proponent testimony , and representatives from the Montana’s Framer’s Union, the Hotel Employees and Restaurant Union, and Blue Cross and Blue Shield of Montana, focused heavily on the need to provide health care to employees of smaller business, and the inability of lower wage workers to pay for medical services.None of the proponent testimony mentioned that HB 240 excluded all other uses of the MSA money, and no opponents to HB 240 testified.The House Committee on Jobs and Income passed the bill on January 19, 1999, and referred it to the House Committee on Taxation for review.At the February 1, 1999 hearing for HB 240 before the House Committee on Taxation, many of the same proponents again testified, and were joined by representatives from the American Association of Retired Persons, the National Federation of Small Business Association, and the Montana Association of Health Care Providers Association, along with some individual business owners.The lack of affordable health care and medical services for low income workers was reiterated as the main focus in proponent testimony.Again, no mention was made of the HB 240 provision that excluded all other uses of MSA money, and no opponents to HB 240 testified. HB 240 was passed in the House Taxation Committee on March 29, 1999, and sent to the full senate for consideration.HB 240 passed in the House by a vote of 88 to 12 on March 30, 1999.The next day, April 1, 1999, the Billings Gazette and the Associated Press reported that the provision in HB 240 making MSA money exclusive to its purposes had unknowingly slipped by Republican legislators.Swanson admitted to reporters that she intentionally omitted any mention of the MSA provision in hopes that she could keep the bill alive, stating, “I didn’t want to give them [Republican legislators] an excuse to kill the bill,” and believed that HB 240 had a better chance of being passed if it reached the Senate.Most Democrats felt that the intended and most appropriate use of the MSA money was for health care programs, and Swanson asserted that the tax incentives under HB 240, which would increase health care insurance among low and middle wage workers, fit well with that intent, stating that “[i]f this isn’t health care, what is?” Swanson also expressed her belief that HB 240 would prevent Republicans from diverting MSA money to non-health related programs such as corporate tax relief.In response to reporters who wondered how representatives could vote for HB 240 without being aware of the language the exclusively allocated all of the MSA money, House Speaker John Mercer stated, “[t]hat issue didn’t come up,” and that “it slipped through.” Mercer also expressed his belief that the MSA money was meant for tax relief, as well as for health care programs.On April 13, 1999, the Senate Committee on Taxation held a hearing on HB 240, where sponsor Emily Swanson revealed what appeared to be a long developed strategy to reintroduce the MSA allocations that had failed to pass in HB 131 . Swanson’s testimony in favor of the bill was joined by proponents State Auditor Mark O’Keefe and representatives of the National Federation of Independent Businesses and the Montana Farmer’s Union.At the hearing, Swanson proposed amendments that would change HB 240 so that the MSA allocations were very similar to those set out in failed HB 131: 30% would be deposited in the general fund, with the remainder to be “appropriated by the legislature for health related programs, including but not limited to CHIP, the Montana Comprehensive Health Association, and health prevention grants.” Speaker of the House John Mercer, in testifying against HB 240 at the Senate taxation committee hearing, apologized that the bill was before the Senate, characterizing it as an attempt to reintroduce the failed proposals of HB 131 into the Senate after sneaking the MSA allocation provisions through the House. Mercer then urged the committee to remove any reference to the tobacco settlement funds, saying “if it’s a good idea, then pass it without reference to tobacco money.”Bill sponsor Swanson, in her closing statement, noted that the failure of HB 131 was that it inappropriately gave half of the MSA funds to tax relief, when it should be used for the kinds of health-related purposes which would be achieved by her proposed amendments to HB 240.Although the Senate Taxation Committee accepted Swanson’s amendments, they subsequently tabled it. That same day, April 13, 1999, Senate Democrats made a motion to take the bill out of the Tax Committee and put it before the full Senate, but the motion failed in a 20- 30 vote.In addressing the Senate after the defeat of HB 240, Senate Majority Leader John Harp said that the tobacco money would still go to pay for health programs,ebb and flow tray system including health coverage for poor children and uninsurable adults, but that those allocations would be made in the final version of House Bill 2, the chief state spending bill for the upcoming two-year budget period. Harp also made reference to the controversial MSA allocation provision in HB 240 when he told the Senate, “[w]e’re going to be up front on how we spend the tobacco money,”Senate Bill 323 was introduced on January 29, 1999 by sponsor Steve Doherty , and proposed submitting for public vote an amendment to the Montana Constitution that would require the legislature to dedicate 50% of the MSA proceeds to a permanent trust fund and the other 50% to be put into the general fund.
The amendment would have allowed the interest from the trust fund to be appropriated for health care programs, though the allocation to various programs was not specified in the bill. At the February 5, 1999 hearing before the Senate Committee on Finance and Claims, Doherty explained that the 50% division in the bill resulted from his desire to find a balance between the immediate need for funding health care and prevention programs, and a desire to safeguard the fund from future uncertainties.Other proponents of SB 323 testifying at the hearing were Chris Tweeten, Chief Counsel for the Attorney General, Art Dickhoff, representing the American Cancer Society ; and Dennis Alexander, representing the American Lung Association . Tweeton explained that a statutory trust, as opposed to a Constitutional trust, would be illusory because it could be raided when a simple majority of the legislature wanted the money. A Constitutional trust, as laid out in SB 323, would require approval of two thirds of the members of each house of the legislature. Dickhoff of the ACS, in suppoting SB 323, suggested that a portion of the money dedicated to health programs under the bill be used for a comprehensive tobacco control program, and Alexander of the ALA advised the committee that the trust would be good idea because funds would be needed for health care costs in the long term.No opponents of SB 131 testified at the hearing. The Senate Finance Committee passed the bill in a 15 to 2 vote and referred it to the Senate Public Health Committee for consideration.At the February 15, 1999 hearing for SB 323 before the Senate Committee on Public Health, Welfare and Safety, sponsor Doherty reiterated the reasoning behind the bill and was joined by proponent testimony from Attorney General Joe Mazurek and Jim Smith from the American Cancer Society.Mazurek again explained the illusory nature of a statutory trust, since it could be removed by a simple majority of the legislature, and noted that such dismantling of statutory trusts had previously occurred in Montana. Thus, Mazurek explained, a Constitutional trust was necessary to truly protect the MSA funds.The Committee on Public Health approved the bill in a 9 to 2 vote on February 18, 1999, and sent it to be heard by the full Senate. On February 22, 1999, the Senate voted against SB 323 in a 24 to 26 vote, but because it was a constitutional amendment proposal, the bill had to be heard by the full legislature, and was required to receive two-thirds support, or a combined total of 100 affirmative votes, from both House and Senate. Thus, it was required that SB 323 be voted on by the House. Since SB 323 had received only 24 votes in the Senate, it would need to receive 76 House votes to make it to the ballot.117 A hearing in the House Human Services Committee was held on March 19, 1999, where 11 proponents testified, including Attorney General Joe Mazurek and representatives of the American Lung Association of Montana, the American Cancer Society, the Montana Senior Citizen’s Association, the Montana’s Nurse’s Union, the Citizens with Tobacco Induced Diseases group, and the Better Breathers group. No opponents testified against SB 323, and the House Human Services Committee passed the bill in a 12 to 5 vote on April 9, 1999.Because the number of necessary House votes needed for passage was so high, the final vote on SB 323 was considered by reporters to be a mere formality before its ultimate failure. The members of the Republican majority in the House had already publicly expressed that the 50% set-aside in the bill was too high, and Gov. Racicot, though in favor of putting the money into a trust fund, initially was not strongly supportive of creating a constitutional trust because he wanted the MSA money available in case the state needed it in the future.Rep. Tom Zook , Chairman of the House Committee on Appropriations, commented to reporters that under SB 323 the state would have a large amount of money unavailable for future government programs. Zook said that “[y]ou really can’t project all the needs that are going to be there,” and that “the more flexibility you allow your future legislators, the better off you’ll be.”On April 19, 1999, the House vote on SB 323 was tied at 50 to 50, twenty-six votes short the number needed for passage. Though SB 323 failed, the idea of asking voters to put a large portion of the tobacco-settlement into a health care trust fund would return only months later, and with greater political support.