Top state budget priorities set to become clearer this weekend

Senator Rick Ripley (R-Wolf Creek)

Senator Rick Ripley (R-Wolf Creek)

The Senate has its work cut out for it this weekend. The chamber’s Republicans and Democrats will be focused on pushing forward the state’s two-year, $9 billion budget. The main budget bill, HB2, unanimously passed the House last month.

“Almost all the work’s left to do yet,” said Senate Finance Chairman, Senator Rick Ripley (R-Wolf Creek). Senators will be considering amendments to make room in the budget for other major proposals being considered by the wider legislature, such as a fix to the state’s pension debts, state employee pay raises, and funding for construction projects.

“It’s a complicated process to begin with,” Ripley said, “but…we have so many unusual circumstances that normally in a regular legislative session we wouldn’t have to deal with.” He’s referring to the large bills for fixing the pensions and state employee pay raises.

The Governor’s Office wants the Legislature to close on the budget with $300 million left in the bank, otherwise known as the ‘ending fund balance.’ But a balance sheet put out this week from the Legislative Fiscal Division shows the fund almost $95 million in the hole.

Senator Jon Sesso (D-Butte)

Senator Jon Sesso (D-Butte)

“It’s not as bad as the status report really looks,” explains Senate Minority Leader Jon Sesso, who is also on the Finance Committee. That balance sheet includes the costs of all bills still working their way through the Legislative process at this point. “If we went home today, passed House Bill 2… and didn’t pass any other bills, we’ve got $700 million in the bank.”

The question now is what’s going to make it in out of the major projects yet to pass. Sen. Ripley predicts most big projects will probably make it through, “but chopping away at the edges of them and whittling them down to where we can deal with ’em” rather than killing the ideas. He mentions the House removing large portions of money from Sen. Llew Jones’ (R-Conrad) major education funding legislation.
Senator Sesso looks to a number of major tax cut bills still in the works. “Some of the permanent tax relief is premature,” he said, saying those could put the budget out of structural balance in the long term. He prefers some one-time tax cut options. Democratic Governor Steve Bullock did not comment too much the budget, which he calls ‘a moving target.’ But, he echoed some of Sesso’s thoughts on tax cuts.
“What I said at the start is we’re gonna fund essential services and long-term liabilities before we start new programs or tax cuts,” Bullock said.
Although he does have veto power, it’s not Bullock’s call what to fund. That responsibility falls to the Republican-controlled legislature.
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Revenue Estimate passes out of Senate Tax Committee

The Montana Senate Taxation Committee unanimously passed the bill containing the state’s revenue estimate on Friday. The estimate is used as a basis for state spending. Lawmakers from a joint House/Senate Committee have been meeting to discuss the estimate provided to lawmakers from the Legislative Fiscal Division.

The revenue estimate passed by the committee is a little more than $4 billion over the next two year budget cycle. The Senate Taxation Committee also unanimously amended the estimate $30 million higher during their Friday meeting, due to adjusted figures from the Legislative Fiscal Division.

Another amendment to add an additional $30 million to the estimate failed on a party line vote. This additional $30 million would have moved the figure closer to the higher estimate provided by the Governor’s Office of Budget and Program Planning, which uses a different method for predicting revenue.

Sen. Christine Kaufmann

Sen. Christine Kaufmann

Senator Christine Kaufmann (D-Helena) says the process of coming to the revenue estimate is a good one that resulted in a good starting place, but it could be better. She thinks economic factors studied by the Governor’s Office show revenues coming in stronger than what has been previously anticipated and she thinks that will keep happening throughout the session.

“We could have added a little bit more money to the estimate, and I think that would provide us a little more room for whatever we might need in terms of investing in public education and other services for Montana,” she said.

Sen. Ron Arthun

Sen. Ron Arthun

Republican members of the Taxation Committee say the revenue estimate could be off either way, positive or negative. Senator Ron Arthun (R-Wilsall) say the more conservative estimate will lead to less spending and “if the revenue comes in at a greater amount, there will just be more in the coffers for the next session.”

The revenue estimate now moves up to the full Senate for a vote next week. If passed, it moves over to the house.

Schweitzer continues to criticize Republican lawmakers for budget predictions

Governor Schweitzer speaks to reporters Tuesday

Governor Brian Schweitzer is pointing to the latest state budget figures showing the second-highest budget surplus in Montana history.

The state ended this past fiscal year last month with $453 million in the bank. Schweitzer used the figure to blast Republican majorities in the state legislature for passing a budget based on predictions of a large deficit—predictions the Governor calls outright lies.

Republicans are not apologizing.

Governor Schweitzer called a Tuesday morning press conference with reporters the start of his “I told you so Tour.”

Schweitzer is finishing his final term at the end of this year and says the results are in when it comes to his fiscal management style. He says he has presided over the largest budget surpluses in Montana history, including this last year. Over $450 million in the black. Schweitzer then used the press conference to repeatedly call Republican lawmakers liars and thieves.

It comes down to the financial predictions Republicans were using to set the state budget last legislative session. These figures came from the non-partisan Legislative Fiscal Division, predicting a possible $400 million shortfall for last fiscal year. Instead, Schweitzer again points out the budget came out $453 million ahead, which is close to what his budget office had been predicting the whole time.

“So that’s $853 million in a $1.8 billion budget. that’s not even close. that’s off by 40 percent,” Schweitzer said.

The Fiscal Division is normally off by about 6 percent. Schweitzer says that proves that Republican Legislators are unduly influencing that nonpartisan office.

“See, you can’t possibly guess 40 percent wrong unless somebody has their finger on the scale,” Schweitzer said. “When you look at exactly the same numbers, the Governor’s budget Office and the Legislative Fiscal Division. They come up with crazy numbers and we come up with numbers that were accurate. Tell yourself, what’s going on?”

“The Governor certainly is correct that he was right that we had stronger growth that anyone had anticipated,” said Helena Republican Senator Dave Lewis, a proponent of those deficit predictions. Lewis says the Fiscal Division is not being inappropriately swayed by Republicans.

“They’ve worked with Republican majorities and Democratic majorities over the years and that’s I think an insult on behalf of the Governor to say that about the professional staff of that office,” Lewis said.

Hey says they have been putting these predictions together for 40 years and have found conservative budget predictions to be safer. Staff at the Legislative Fiscal Division declined comment for this story. But Butte Democratic Representative and Legislative Finance Committee Chair Jon Sesso also defends the Fiscal Division, saying that office should be held harmless in this situation.

“They gave us scenarios,” Sesso said. “They gave us the optimistic picture, the middle of the road and the worst case scenario and it was the republican leadership that concentrated on the worst case scenario and that’s why we have the wide disparity.”

State Republicans say the Governor is not being civil in his attacks regarding the budget. They say their budget helped make sure finances were sound. Again, Senator Dave Lewis.

“We’ve always been trained to be cautious in Montana because we have a volatile revenue situation here because we’re a resource based economy and so we generally tend to be cautious and I certainly don’t apologize for that,” Lewis said.