The 2017 Montana legislative session failed in its No. 1 job: It failed to produce a biennial state budget that works.
Looking two years down the fiscal road is always a challenge, and circumstances can throw off the best projections. But this year, the forecast changed just a few weeks after Gov. Steve Bullock signed the budget legislation.
How could the state’s revenue outlook change so quickly?
The budget signed into law was already austere, then in June came word from budget director Dan Villa that agencies receiving general fund money would have to cut 5 percent of their budget this year. Then Montana saw an early start to one of the most expensive wildfire seasons with more than $44.5 million expended by the end of August.
Last week, Villa notified state agencies and the public that still lower revenue projects mandated a 10-percent budget cut atop the 5-percent cut. With two months of the fiscal year already past, that means taking a 15-percent annual cut out of the remaining 10 months. Such reductions will be felt in all 56 counties, by state workers and private sector workers whose firms contract with the state.
Villa directed executive branch agencies to present 10-percent budget cut plans by Friday. The Legislative and Judiciary branches agreed to come up with 10 percent cuts, too. The Office of Public Instruction, headed by Elsie Arntzen, and Department of Justice, led by Attorney General Tim Fox, also will have to identify cuts.
Democrats and Republicans have blamed the other party for the growing gap between today’s revenue projections and those used for the budget in late April.
Here we are in September with Montanans who rely on efficient government services afraid that they will be lost. Advocates for kids, elderly and disabled Medicaid enrollees worry about rate cuts proposed for Oct. 1, and that was before last week’s “another 10 percent” directive. Local school districts, cities and counties have already adopted annual budgets as required by state law. What happens if the state takes money away or unilaterally reduces what it pays local governments for services?
Data from the Montana Department of Revenue shows that total general fund tax collections dropped in fiscal 2016 and remained below the fiscal 2015 total in fiscal 2017, which ended June 30. Despite that trend, the biennial budget was based on projections that tax collections would increase more significantly last spring and this summer. The July 2017 tax collections illustrate how the prediction gap grows:
According to DOR, the general fund collected $103 million for that month, which was $11 million more than for the same month of 2016. However, the July 2017 collection was $9.7 million less than what House Bill 2 projected. The difference between projections and actual created the budget shortfall.
As of last week, Villa said he expects the shortfall will grow to $227 million by the end of the budget biennium in June 2019. He cited state law that requires keeping a minimum ending fund balance in the general fund, which means mandatory spending cuts.
Thousands of Montanans concerned about state services trekked to Helena, wrote letters, sent email, made calls to lawmakers in January through April. They will have little or no input on the latest, deepest round of spending cuts that could wipe out community mental health services and further overload the probation and parole officers new legislation counted on to reduce recidivism.
We call on R’s and D’s to communicate much more clearly with the public. Explain to us exactly what 10 percent reductions in the judiciary or commerce or labor means. Tell us what educational and health services will be curtailed. Tell us county by county what’s at stake as Montana rushes to match its spending to lower tax revenue.
We call on Bullock and GOP leaders, including House Speaker Austin Knudsen, House Appropriations Chairwoman Nancy Balance, Senate President Scott Sales and Senate Finance Chairman Llew Jones, to present workable solutions. Consider new ideas. Communicate candidly with your constituents. Take responsibility for this situation — and stop pointing fingers.