HELENA – When state lawmakers return to Helena later this week to start the 2019 session’s second half, the focus will be hammering out the state’s two-year budget – and that means bridging a wide gulf between Democratic Gov. Steve Bullock and the Republican majority.
The first draft of the $10.4 billion budget, crafted by Republican-controlled subcommittees the past seven weeks, looks good on paper, with an ending fund balance of nearly $300 million.
But Bullock and fellow Democrats say it doesn’t fund many key items, and that once those programs are added, more tax revenue will be needed to make things balance.
“We’ve got to fund the government that folks expect and we’ve got to leave some money in the bank,” Bullock told MTN News late last week.
Yet Republicans, who control majorities in both houses of the Legislature, have made it clear they plan to resist any tax increases and say the budget can be balanced with existing revenue.
“There are thousands of interests up here competing for money,” state Senate President Scott Sales, R-Bozeman, told MTN News. “But it appears that we have enough (revenue) if we’re disciplined and just stick to the business that we currently have at hand.”
On Thursday, the House Appropriations Committee begins voting on House Bill 2, the session’s major spending bill.
Among the items not yet in the overall budget are Medicaid expansion, which is probably at least another $60 million; the governor’s $22 million preschool program; inflationary increases for special education; and funding for a program that helps teachers repay student loans.
Also, nearly 50 additional bills that have passed at least one house of the Legislature would further reduce the bottom line by another $150 million – and that doesn’t include several tax-cut bills still in committee.
Tom Livers, the governor’s budget director, notes that many of these spending or tax-cut bills are sponsored by Republicans.
“The majority party isn’t embracing any kind of revenue (increase), but they’re a source of a lot of these spending bills that come in,” he said. “The bottom line is, we’ve got to be able to pay for it. There are a lot of good ideas out there.”
Among those proposals is Senate Bill 217, a measure from Republican Sen. David Howard of Park City, which cuts state income taxes on Social Security benefits – costing the state treasury $33 million over the next two years. The Senate approved the bill last week on a mostly party-line vote, with Republicans in favor.
Lawmakers also must decide whether they want to pass a major infrastructure-funding bill, and how much of it is financed by debt or cash.
Bullock has proposed tax or fee increases on tobacco, liquor, rental cars, lodging and investment advisers. Bills to enact those increases will be introduced this month.
The governor told reporters late last week that he hopes Republicans aren’t drawing lines in the sand on revenue increases.
“There are certainly some legislators who have said any (tax) increase is dead on arrival,” Bullock said. “I think that taking that sort of frame would certainly do a disservice to Montanans, if we’re going to take out half of the equation from the discussion.”
The debate over Medicaid expansion, the $700 million-a-year program that pays medical bills for 95,000 low-income adults in Montana, also is just beginning at the Legislature. The Republican bill, sponsored by Rep. Ed Buttrey of Great Falls, is expected to be introduced this week.
The House Human Services Committee has scheduled a March 16 hearing on both Buttrey’s bill and House Bill 425, the Democratic proposal to continue the program.
Rep. Mary Caferro, D-Helena, the sponsor of HB425, also serves on the budget subcommittee that hashed out the initial draft of the state human-service budget, which accounts for 40 percent of overall state spending.
She said the bipartisan panel worked well together to restore cuts made during last year’s budget crisis and allocate money to services in local communities.
Still, she said the state definitely needs more tax revenue, to fully fund those and other related programs.
“Every year the cost of providing the same service, of teaching the same kid, the same material, goes up,” she told MTN News. “All of those expenses go up, and to think that we can continue to fund the same level of service with less revenue – that doesn’t make sense to me.”
Another key point of contention will be how much year-end cushion is left in the budget.
Bullock wants $300 million; Republicans have said that $200 million is adequate. They say the difference negates Bullock’s request for approximately $100 million in new taxes.
Rep. Nancy Ballance, R-Hamilton, who co-chairs the House Appropriations Committee, said another $60 million cushion will be available in a special emergency reserve.
But Livers said that reserve would become available only after the administration made drastic cuts in the face of a revenue shortfall.
“We just came off a revenue shortfall in the (2017) special session, and there were some pretty significant disruptions in services to get there,” he said. “We don’t want to repeat that.”