HELENA — Putting together the pieces of the state’s two-year budget takes center stage at the Montana Legislature this week, when lawmakers return from their mid-session break.
But House Republican leaders want the budget puzzle to include more than just a spending plan; they also want it built around a plan for cutting Montanans’ taxes, now and into the future.
“I don’t want to leave any cracks in this thing,” said Rep. Duane Ankney, R-Colstrip, the chairman of the House Appropriations Committee. “We want to coordinate with the tax bills, so people get the full picture of the budget and spending.”
Starting Wednesday, the 21-member committee will spend three days voting on House Bill 2, which sets spending levels for state agencies over the next two years.
In their current form, HB2 and related spending bills compose a $4 billion general fund state budget, about 7 percent higher than the state’s current two-year budget. The spending bills also include billions more in federal funds.
Even with that increase, however, the state still has a projected $480 million budget surplus by June 2015, the end of the two-year budget.
How to divvy up that surplus — via spending, tax cuts or both — will be the crux of the battle over the budget waged between the Legislature’s Republican majority and Democratic Gov. Steve Bullock.
Spending items that have yet to be decided and that would reduce the surplus are a pay raise for state employees, fixes for financially troubled public-employee pension funds, an oil-and-gas impact fund and proposed state building projects.
Republicans say they support some form of raise for state workers, who haven’t had a raise in base pay since 2009, but haven’t decided how much or in what form, and the oil-and-gas fund has bipartisan support.
The Bullock administration and its Democratic allies also say they’ll try to restore some spending that’s been cut from HB2, including the budget of the Department of Fish, Wildlife and Parks, federal funds for family planning and a program to help veterans attend the university system.
But, overall, they’re mostly satisfied with spending plans endorsed by joint House-Senate panels that worked on the budget the past two months.
“We’re appreciative of the work that the (budget) subcommittees did,” said Dan Villa, the governor’s budget director. “They’ve adopted, in large part, the budget of the governor.”
The deeper disagreements will be over tax policy, and how much of the $480 million surplus will end up being “spent” on tax cuts, and in what form.
Republican lawmakers have put forth bills proposing income and property tax cuts of more than $300 million, and so far have rejected Bullock’s more modest proposals to rebate or cut taxes by some $120 million.
“If the choice is between spending (the surplus) and having tax relief, I think a number of us are in favor of tax relief,” said Senate Majority Leader Art Wittich, R-Bozeman. “There’s more money coming in than expected.
“I think it’s still too early to know which tax bill will be the best, but we know we want a number of them.”
Several of these tax bills have been sent to Ankney’s Appropriations Committee. He says as the panel votes on HB2 and crafts a proposed overall budget in the coming weeks it also will be sorting out how much tax relief the state can afford, and in what form.
“You look at what you got in (the budget), you look at what you need in there and you look at what you can give back,” Ankney said last week. “That’s the beauty of Montana; you’ve got to have a balanced budget. That’s what keeps it from getting complicated.”
Ankney also says — and Democrats agree — that the budget panels that put together the preliminary budget in HB2 worked mostly in a bipartisan fashion, with many unanimous votes.
“The partisan door has not been slammed in the Appropriations Committee,” said Rep. Galen Hollenbaugh of Helena, the panel’s Democratic vice-chair. “This committee is working really hard to find our common ground, and then to move on from there.”
Still, Hollenbaugh says Democrats worry that tax cuts will take a priority over funding needed state programs.
“Burning the candle at both ends, if you will, through permanent tax cuts needs to be balanced with the programs that are appropriate,” he says.