Horse Sense: With 1 month to go at Legislature, budget precariously out of balance

2013-03-31T00:15:00Z 2013-03-31T23:11:08Z Horse Sense: With 1 month to go at Legislature, budget precariously out of balanceBy CHARLES S. JOHNSON Gazette State Bureau The Billings Gazette

HELENA — Remember those glory days in January when the Montana’s state treasury was stuffed with cash?

It was Montana’s equivalent of Scrooge McDuck’s money bin.

As they eyed this money, both political parties had their own priorities.

Republican legislators dreamed of returning much of the excess money to taxpayers by cutting taxes.

Democratic legislators and Gov. Steve Bullock had their own hopes. They wanted to spend some of the cash on education and human services, plus make selective tax cuts and give a rebate.

In January, the projected ending general fund balance for mid-2013 topped $450 million, an astronomical figure for Montana.

In January, Bullock proposed a two-year budget that, if fully approved, would leave a $301 million ending general fund balance by mid-2015.

Three months later, the projected cash surplus has nearly evaporated.

The projected mid-2015 ending fund balance has nosedived to $58 million.

The general fund status update came Wednesday from the Legislative Fiscal Division, which takes into account legislative action so far.

Even more troubling, the analysis shows the state facing a structural balance that’s now in the red by $178 million as of mid-2015. That means the Legislature has proposed spending $178 million more over the next two years than the state expects to collect in revenue so far.

Under Montana’s Constitution, the Legislature must pass a balanced budget. The Constitution says: “Appropriations by the Legislature shall not exceed anticipated revenues.”

With a month remaining in the 2013 session, the major job left for the Legislature is to fix the budget to provide for a healthy ending fund total and to make it balance structurally.

Bullock has an equally critical role. He not only has the power to veto bills — including spending and tax measures — but also to strip money out of appropriations bills with line-item vetoes.

It is not unprecedented for the state’s proposed budget to be off kilter at this stage of a legislative session. The budget always dominates the final month, weeks and hours of a session.

“Coming into the session, I said that I expected structural balance and expected a healthy ending fund balance at the end,” Bullock said Friday. “Where we are isn’t there.

“The Legislature is going to have to get it back to structural balance and a healthy ending fund balance. The parameters I laid out were clear upfront. If not, I’ll have to.”

Bullock still wants a general fund ending balance of $300 million as of mid-2015, plus a structurally balanced budget.

All appropriations bills must originate in the House, including House Bill 2, the major spending bill for state government.

The bills have moved to the Senate, which will have the final legislative say on the budget.

Senate President Jeff Essmann, R-Billings, also is concerned with the state of the budget.

“I think Senate Finance and Claims is going to have to roll up its sleeves and get to work,” Essmann said. That’s the panel that will take up HB2 and the other spending bills.

“It’s very concerning to me the structural balance situation is so far out of whack,” Essmann said. “If you set your ongoing expenses growing at a path faster than your ongoing revenues are growing, you create pressure for future legislatures to pass tax increases.”

Republican legislation to cut tax bills is moving along too, while the GOP-controlled House and Senate have deep-sixed most Democratic tax bills.

The cornerstone of Bullock’s campaign for governor — his proposed one-time, $400 property tax rebate bill, with a $100 million price tag — remains in the House Taxation Committee. It was heard Feb. 22, but hasn’t been acted on.

Are Republicans holding it hostage for a deal with Bullock? Revenue bills must move to the other chamber by April 5. After that, it will take a supermajority vote to waive the rules to move any tax bills.

The rival Republican tax cut bill by Rep. Scott Reichner, R-Bigfork, would provide $100 million in property tax cuts over the next two years, and in future years, too, unless it is changed.

A top Bullock staffer has testified against this bill. She pointed out that the average Montana homeowner would receive only $44 in reduced taxes, while some major out-of-state corporations would reap tax savings that exceed $1 million.

“I think if we’re going to provide tax cuts, I’d rather give them to Main Street Montana than out-of-state corporations,” Bullock said.

But with the structural balance underwater, Bullock said cutting taxes may be difficult.

“So I’ll take a look at all the tax cut bills together, certainly,” he said. “To the extent we have room to give tax cuts, I’d like it to go to Main Street.”

While they differ on the budget priorities, Essmann said, “Personally, I would prefer to have a healthy ending fund balance like the governor.

“My reason for favoring a healthy ending fund balance is I’m nervous about the revenue estimates. Unfortunately, we only have anecdotal evidence that some economic activity in Montana may not be as robust as we hope.”

Johnson is chief of the Gazette State Bureau in Helena. He can be reached at (800) 525-4920 or (406) 447-4006. His e-mail address is chuck.johnson@lee.net .

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

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