HELENA — Gov. Brian Schweitzer said Tuesday that the state’s cloudy future financial picture will brighten up through a combination of proposed and announced spending cuts and extra money from the federal government.
He reiterated that he sees no need for a special legislative session to bring the state’s general fund budget into balance. The steps the administration is taking will leave a $90.1 million surplus by the end of the two-year budget period in mid-2011, said David Ewer, Schweitzer’s budget director.
“It doesn’t sound like a cookie jar that’s empty,” Schweitzer told reporters. “It sounds like there’s a few cookies in there and they’re not old and some of them have chocolate chips in them.”
Less than three weeks ago, Ewer had predicted a mid-2011 balance of $5.6 million, which was perilously close to red ink, but that total didn’t include the latest adjustments.
The Legislature’s chief revenue forecaster, Terry Johnson, last week forecast a $62.5 million deficit by mid-2011 because of declining tax collections. His estimate also didn’t include some of these proposed reductions.
On Tuesday, Ewer unveiled $40.5 million in proposed budget cuts, after his office reviewed the $46.1 million in reductions submitted by agencies in late January at Schweitzer’s request.
Ewer’s proposed budget cuts go before the Legislative Finance Committee for a hearing and comments in early March. Schweitzer is authorized to order the cuts after that, and the new proposed balance sheet envisions them.
“As we said before, we would measure three times and cut once,” Schweitzer said. “One is when it came from our agency directors. The second is when my budget director has made some recommendations.
Actual cuts announced
“But there is still one more measurement to be done. I’m going to review these suggestions line by line, item by item and then, and only then, will I announce what the actual cuts will be.”
With about half of the 150 legislators expected to be in town for training in early March, Schweitzer said he wants to see lawmakers take formal votes on the cuts instead of offering 150 different opinions.
“Maybe it would make the most sense if they agree with the cuts, well, then they have votes on the record that tell us they agree,” he said. “If they disagree with the cuts or what portion of the cuts they disagree with, they should do so on the record with votes.”
In response, Senate President Bob Story, R-Park City, said, “There’s a process for that. It’s called a special session. If you want a formal opinion of the Legislature, you need to call a special session and then you can vote. Other than that, the Legislature has no authority to vote and no reason to vote.”
Schweitzer said legislators can vote to call themselves into special session, although that’s something that’s been done only once since the 1972 constitution first allowed it.
“But if they call themselves into special session, it’s not because we’ve got a shortage of money,” Schweitzer said. “We’ve got money in the bank.”
House Speaker Bob Bergren, D-Havre, said he doesn’t see the need to call a special session because “I don’t think the sky is falling yet.” But he said he doesn’t know how lawmakers not on the Finance Committee would have any authority to vote on the proposed cuts.
Ewer said the budget office didn’t change many of the agencies’ original recommendations.
One major change was that the Revenue Department’s original $2.6 million in proposed 5 percent cuts was chopped to $261,499. While virtually all state agencies want to spend money, Schweitzer said this department is really the only one that collects money, including taxes from out-of-staters who don’t pay their fair share.
Another was the Office of Public Defender, which came up with nearly $1 million in proposed cuts to reach the 5 percent request. Ewer’s office dropped that new agency’s share to $7,479.
The Schweitzer administration’s new balance sheet shows the $40.5 million in proposed budget cuts and $41.9 million in its previously announced reductions that require approval by the 2011 Legislature.
Also included are two adjustments totaling $23.1 million resulting in less state money or more federal money being spent on Medicaid, the federal-state health care program for the poor. When state unemployment rates hit certain levels, the federal government pays a greater share for Medicaid.
The administration’s estimates do not include any potential revenue from the Otter Creek coal tracts that the state is trying to lease.
Schweitzer also said he remains confident that Montana’s economy is on the rebound, based on what he hears from bankers and business people around the state.