The Republican leaders in the Legislature on Wednesday questioned the necessity of proposed across-the-board 10 percent cuts to nearly every agency in state government, saying it’s too early and there’s not enough information to act yet.
“We’re only three months into the state fiscal year,” said Rep. Austin Knudsen, a Republican from Culbertson who served as Speaker of the House in the last legislative session. “We’re set to get a revenue update in November. At that point we’ll have some income tax and property tax starting to roll into the state, and we should have a better picture of what the state revenue picture is like.”
Earlier this fall, Gov. Steve Bullock’s budget director certified a projected deficit in the general fund budget, based off his projections for what the state will take in over the next two years. At the end of the last fiscal year in June, revenues had already come in $75 million less than the estimates adopted by the Legislature, from which the state budget was built. Most of the shortfalls come from lower-than-expected income tax collections.
Budget director Dan Villa has predicted shortfalls of $131 million in the current fiscal year and $144 million the following. The shortfall Villa predicts is not the state taking in less money than previous years; rather it is the state bringing in less money than estimates adopted by the Legislature.
Bullock, a Democrat, is required by law to keep the state’s budget balanced. He can reduce spending by up to 10 percent of nearly every statewide agency, and has received plans from each sector in state government on what they would cut to meet that level.
The governor’s staff is reaching out to lawmakers to try to reach a mix of cuts and either find pockets of money the state can tap or explore temporary tax increases to make up for the $226 million shortfall. While the governor has said at some point a special session will be necessary to help pay the state’s $70 million tab for fighting fires this summer, it’s unclear when that would happen.
There are indications that if the governor can make some level of cuts, maybe $100 million or more as suggested by Sen. Llew Jones, a Republican from Conrad who was a major architect of the budget, lawmakers would be willing to explore a temporary increase to taxes like those paid on hotel rooms or look at other ways to find money to reduce the overall amount of cuts.
But some lawmakers, such as Knudsen, seem less open to the idea. A special session isn’t necessary at this point, he said Wednesday, to “fix what we don’t even know for sure is a budget problem.”
While he and other legislative leaders conceded Villa’s projections may be right, they want to wait for more information to see.
Republicans also criticized the nature of cuts in a call with members of the press Wednesday. Legislators on the call included Knudsen, Jones, Rep. Nancy Ballance of Hamilton and Sen. Fred Thomas, the Senate majority leader from Stevensville.
“It seems like the reductions he’s proposing protect Helena but not services to the citizens of the state,” Thomas said. Cuts in the Department of Public Health and Human services have caused outcry from those who say the services they receive are critical to their survival.
Villa countered any questions that his projections could be wrong by pointing out that revenue estimates were already off $75 million for fiscal year 2017 and the state just saw its most expensive fire season in history.
“Those are two realities you literally have to have your head in the sand to miss,” he said.
He also said that major payments are due to local school districts soon totaling $120 million, while there was only $87 million in the state’s general fund as of Wednesday morning.