Bullock signs major spending bills; budget director to run final numbers on Tuesday

2013-05-06T21:29:00Z 2013-05-12T09:24:04Z Bullock signs major spending bills; budget director to run final numbers on TuesdayBy CHARLES S. JOHNSON Gazette State Bureau The Billings Gazette

HELENA — Gov. Steve Bullock on Monday signed into law some major spending bills to fix Montana’s troubled pension systems, raise state employees’ salaries and pay for some new and renovated university system buildings.

He also signed a major proposal to overhaul Montana’s school funding and to provide some property tax relief.

Another bill Bullock signed will reduce the state’s property tax on business equipment.

Bullock is nearly done taking action on the bills sent to him by the 2013 Legislature, which adjourned April 24.

He also vetoed a number of bills, including some tax measures.

Bullock’s spokesman Kevin O’Brien said Monday night that he’s confident that all of the governor’s vetoes on Monday and previously will total “in the neighborhood of $150 million.”

He said Budget Director Dan Villa will be running the final budget numbers Tuesday to get totals on the projected general fund ending balance, or surplus, as of mid-2015.

One of Bullock’s main budget priorities was to end with an estimated general fund surplus of $300 million as of mid-2015 and one that doesn’t spend more than it receives in revenue.

The separate Legislative Fiscal Division estimated April 25 that the Legislature left a surplus of $182 million as of mid-2015, prior to many of Bullock’s decisions to sign or veto bills. Using its numbers and adding Bullock’s vetoes unofficially would provide a projected state surplus topping $330 million.

Here are some of the major spending bills Bullock signed Monday, by subject:

-- Pensions. Bullock signed into law two bills aiming to put the Montana Public Employees’ Retirement and Teachers Retirement systems back on track financially. The state’s eight pension funds face a combined potential shortfall of $4.3 billion, largely because the pensions’ funds investment lost one-fourth of their value during the 2008 recession.

House Bill 377, by Rep. Tom Woods, D-Bozeman, deals with the TRS system, while HB454, by Rep. Bill McChesney, D-Miles City, addresses the PERS system. Both bills require employees and employees to pay more into the retirement funds and cut cost-of-living increases for current and future retirees.

The state is pumping nearly $55 million into TRS and nearly $73 million into PERS over the next two years, with much of the money coming from natural resources revenues and interest.

Retired public employees have said they will file a lawsuit against the reduction in their cost-of-living increase, known as the Guaranteed Annual Benefit Adjustments or GABA, contending it breaks the state’s contract with them.

-- Pay. The governor signed HB13, by Rep. Kathy Swanson, D-Anaconda, into law. As proposed, the bill would have implemented the pay deal negotiated last summer by then-Gov. Brian Schweitzer and public employee unions to raise state employees’ base pay by 5 percent in each of the next two years. Many state employees haven’t seen their base pay increase in four years.

The Legislature stripped the requirement for the matching 5 percent raises and reduced the appropriation to pay for salary increases by 25 percent.

However, state employee union leaders said last week they will renegotiate with Bullock and still press for the 5 percent raises each year by delaying the implementation dates, originally set for July 1 each year, to possibly mid-to-late October in each of the two years.

-- Buildings. Bullock signed HB5, by Rep. Duane Ankney, R-Colstrip, which, among other things, appropriates nearly $50 million in cash to build and renovate some university system buildings.

The administration originally proposed issuing nearly $100 million in state bonds to finance a more extensive state building program and to create jobs, but that bill required a difficult-to-obtain two-thirds majority in each chamber.

Instead, some of the projects were folded into HB5, where a simple majority was needed.

The projects ultimately funded were: Missoula College, new building, $29 million; Montana State University Billings, science and tech building addition, $10 million; Montana Tech, natural resource research center, $5 million; University of Montana-Western, third phase of Main Hall renovation, $4 million; Great Falls College, roof replacement and other renovations, $1 million.

-- School funding. Bullock signed into law SB175, by Sen. Llew Jones, R-Conrad, which rewrites the state’s public school funding system, holds down local property taxes and increases state funding for schools by $75 million over the next two years.

The bill also increases state lump-sum payments to school districts affected by oil and gas development in eastern Montana, while freezing local school property taxes for the next two years.

-- Business equipment taxes. The only major tax reduction bill that Bullock signed was SB96, by Sen. Bruce Tutvedt, R-Kalispell. It will cut property taxes on business equipment by $18.4 million.

The law cuts the business equipment tax two ways. It exempts the first $100,000 worth of business equipment from taxes, up from the current $20,000.

It also reduces the tax rate to 1.5 percent on the first $6 million worth of equipment. The current tax is 2 percent on the first $2 million and 3 percent on the on the remaining value of equipment.

-- Public works: Another new law is HB11, by Rep. Steve Gibson, R-East Helena, which allocates money for the Treasure State Endowment Program.

It provides $21.7 million to up to 47 local governments for water and sewer projects and road and bridge repairs. Often the state grants are used to match federal and other sources of money.

Bullock also signed HB6, by Rep. Rob Cook, R-Conrad, to provide renewable resource grants of $20.4 million.

Copyright 2014 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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