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MILES CITY — Inside a small, tidy living room as her parents, an aunt, uncles, and grandparents looked on, 2-year-old Phoebe Hernandez's pigtails bounced as she joyfully toddled over to the visitor in the armchair by the window she loves to peer out.

Earlier this year, Phoebe went from an above-average 18-month-old to non-verbal, without any obvious reason. She stopped making eye contact with her family and was no longer comfortable around strangers. But Tuesday last week, she climbed right up onto the lap of Steve Bullock, governor of Montana.

Phoebe babbled and happily squirmed as the man who is weighing massive proposed budget cuts that would end the program so vital to her turnaround looked from mother to father to grandmother. He told the family he couldn't guarantee the services that led to Phoebe's quick and pronounced turnaround would still exist in a few months.

Bullock came to Miles City and the little blue house just off Main Street with a stroller and Little Tikes Coupe parked neatly out front to meet with a family who would be hurt by proposed 10 percent budget cuts that could take effect before the end of the year. The trip was an exercise in putting a human face on the hundreds of pages of proposed reductions, to make them more relatable than just printed words and obscure acronyms on an inches-high stack of printer paper.

Over the week, he traveled to conservative communities, places where dropping oil prices have a more local effect than just revenue numbers on a balance sheet and the decline of coal means jobs disappearing from the economy, not just less cash flowing into state coffers.


At the end of August, Bullock's budget director issued a memo saying the state's general fund balance would likely dip below a minimum established by state law. Montana cannot legally operate in the red, so when it looks like revenues will come in less than expected mid-year, reductions are mandated.

The same law was triggered during the administrations of former governors Brian Schweitzer and Judy Martz, though neither asked state agencies to recommend cuts up to the maximum 10 percent Bullock is considering.

The state economy is not in a freefall, but revenues are coming in lower than estimates adopted by the Legislature, numbers lawmakers built the budget on. They projected state revenues would grow by 4.5 percent, but reality was closer to just 1 percent for last fiscal year, which ended in June. That meant the state was down $75 million from what it planned on.

Updated revisions produced by the governor's office show the projected shortfall at $131 million next summer and $144 million the following fiscal year. That, combined with the most expensive fire year Montana has ever seen, left the governor searching for ways to come up with $226 million in savings to bring the state back into balance.

That those numbers predicting shortfalls come from the governor's office is not a minor detail for Republican legislative leadership.

"The governor took our revenue estimate, wadded it up, and threw it in the trash and used his own revenue estimate from his own budget office," said Rep. Austin Knudsen, a Republican from Culbertson who was Speaker of the House last session.

Knudsen is one of the more conservative members of his party in the House, sitting to the right of a handful of Republicans who, starting in the 2013 session, have split from their party to vote with Democrats on issues like campaign finance laws, Medicaid expansion and school funding.

During negotiations on an infrastructure bill toward the end of last session, Knudsen was often the least likely candidate to bargain with Bullock. Now the governor is calling for a "willing dance partner" in the Legislature to come back in a special session and temporarily raise taxes to avoid having to make cuts totaling the full $226 million. But it appears the passing of half a year hasn't made Knudsen any more willing to two-step with Bullock.

"The governor has the tools at his disposal to address budget shortfalls," Knudsen said. "We don't need to be talking about raising taxes on Montanans in a down economic year."


Sitting below a wall displaying photos documenting Phoebe at various toddler-hood rites of passages — in the bathtub, wearing a Halloween costume, taking a selfie with mom — her parents listened as Bullock explained why the proposed cuts hit the Department of Public Health and Human Services so deep.

Three agencies — the health department, the university system and the Department of Corrections — make up 85 percent of the state's general fund budget and therefore shoulder a large burden of the $226 million in cuts. The health department alone must cut $105 million to meet its 10 percent share, and when 70 percent of general fund money goes to services, it's impossible to not take away programs in communities statewide.

The health department contracts with local agencies like the Developmental Educational Assistance Program in Miles City to provide services to Phoebe and hundreds of children like her across the state, trying to catch them up to developmental milestones.

Not long after Samantha Hernandez first brought her daughter, Phoebe, to the Developmental Educational Assistance Program, she learned it was included in those hundreds of pages of proposed cuts.

"On the third visit I find out it's possibly getting shut down," Hernandez told Bullock. "Why would it get taken away from Phoebe? I don't want this program to go away and it all to go away."

Reese's is Phoebe's favorite candy; her grandmother Shannon Binkley knows it's not healthy, but their specialist worked with them to show Phoebe's caretakers how to reward her with small bits of sweets. The first time she said "puppy," Binkley cried. Phoebe started saying words in just a short time.

Sandy Peaslee, early intervention program director of the Developmental Educational Assistance Program, said when news of the cuts came, Phoebe's family was the first that popped into her head.

"They are new to services. They are just getting started. What happens if this goes away?" she asked Bullock.

All eight members of Phoebe's extended family live together in a worn-but-well-kept bungalow. They describe themselves as a tribe and work staggered shifts to make sure someone is always home engaging the 2-year-old. All focused on Bullock as he told them he has no choice but to make some cuts but told the family he's hoping the Legislature will meet him halfway with some tax increases.

"You have to pay for fires, you have to pay for things Montanans expect," he said. "But there has to be a better way than this."

The detail of those expectations has filled the better part of a month of dialogue in the Capitol, where hundreds came to ask lawmakers to preserve programs vital to their day-to-day lives.

Knudsen questioned the programs that make up the cuts, saying they were tailored to drum up fear writ large at the hearings and rallies that filled the statehouse rotunda.

"The proposed cuts he put out there in the media and other places were designed to be very graphic cuts in services to boots on the ground, and there are very little cuts, if any, to bureaucracy in Helena."

He and other Republicans keep reminding anyone they can that it's the governor's job to make the cuts, not the Legislature's, saying someone who runs for the big corner office has to take the lows that come with the highs of the job.

"I have no doubt he would like us to do it for him, but he has the statutory authority," Knudsen said.

Phoebe's family joked they'd spent time trying to come up with a solution for Bullock, joking about holding a bake sale.

"I can weld something for you," grandpa Michael Binkley joked.

Proof that Bullock's and other Democrats' calls for a special session to look at increasing taxes on things like cigarettes, beer or hotel rooms has gained some traction, Grandma unpromptedly said she'd support the so-called sin taxes that failed to pass the Legislature to help offset some of the cuts.

"My husband smokes," Grandma said. "I'd love you to raise the taxes on that so he'll stop."


After leaving Phoebe's house, Bullock met with Devon Haigler at the Child and Family Services office here. Haigler would confidently share her success story, written down on notebook paper so she wouldn't forget any details.

Her daughter recently moved back home with her, months after she was removed by Child and Family Services child protection specialists. Haigler was using methamphetamines and struggling to care for her baby.

Her daughter was taken from home at 8 p.m., and she saw her the very next day, a first of many supervised visits that were critical motivation to her recovery.

"At the time, I was positive for meth, and I still got to see her the very next day," Haigler said. "Those visits meant the world to me."

It took her three weeks to build up the trust to reciprocate when the Developmental Educational Assistance Program reached out to arrange supervised visits. She then had two supervised visits a week, for an hour each. That transitioned into in-home visits once a week for up to four hours.

"The visits were very close together," Haigler said. "My daughter, when she did get to see me, it helped her with her trauma. She loves me."

Child and Family Services contracts with the Developmental Educational Assistance Program to do a lot of things, including 90 percent of its supervised visitation.

Parents are motivated to get and stay sober by being able to see their children. And children, Child and Family Services supervisor Jennifer Winkley has found in her years doing this kind of work, love their parents no matter what.

"It's so important we maintain those connections with their parents," Winkley said. "The more time kids get with their parents, it's better for both of them. If these services are cut, it would be devastating."

At this visit, Bullock sat across from Haigler. He was at ease speaking with her, learning about her rough childhood with a drug-addicted mother and connecting over a story about how Haigler's grandmother is smitten with the governor.

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While Miles City Child and Family Services far more often than not succeeds in reunifying families, negative news about the agency statewide tends to dominate, and success stories like Haigler's aren't heard about much. That the cuts could make those storylines less likely was not lost on anyone in the room.

"What might be one line on a piece of paper, that's what funds visitation, that's what funds reunification," Bullock said. "I'm still trying to figure it out. Montanans can't have this level of cuts."

In a call last week with members of statewide media, Sen. Fred Thomas, a Republican from Stevensville who was the majority leader in the Senate last session, criticized both the cuts and the way Bullock has worked to build awareness about them.

"The cuts the governor has put out there and run around the state campaigning on, I do find it fairly repugnant," he said in a call with Republican leadership earlier in the week. "I do think he did that on purpose trying to force the Legislature to do his job."

At the last stop Tuesday, Bullock met with college students at Miles Community College, which could lose $250,000 under the 10 percent cuts.

That could mean a 19 percent tuition increase -- $364 a semester or $728 a year for a Montana resident -- but the college is looking for other ways to find savings, said president Stacy Klippenstein.

He's weighing cutting services like the student success and retention program or trimming within specific academic programs. But there's limits on what you can trim in academic programs while still staying accredited. The college has frozen all spending on travel, supplies and staff development.

The cuts can pile up. Codi Phillips, a student from Boyes, said students understand the situation the state is in, but a 19 percent tuition hike is a big deal. For her, the possible tuition increase would come on top of losing a STEM scholarship and Governor's Best and Brightest scholarship.

"That was $4,000 for me," Phillips said. "Two months before school, I got an email and I had to find an extra $4,000. For me in my life right now, that's a lot of money."

Nineteen percent is a large number, especially when two textbooks for the nursing program this year cost $900 each.

The proposed cuts also come on top of earlier reductions for the college. Last year Miles Community College saw $330,000 taken out of their budget. Forty-six percent of the school's general fund budget is state appropriated, 28 percent is tuition, and the rest is local taxes.

"Just in the last two years we are looking at over a half million dollars in reductions," Klippenstein said. "It is really hard for us to get better. It'd be hard for us to get a budget cut when we are trying to move forward. It's really hard when we've been cut so much in the last couple of years."

Miles Community College wants to add programs: construction trades and work with Dawson Community College on welding. They'd like to help teach local electricians how to work with solar energy. There are opportunities to teach students how to do the reclamation work that will be needed in Colstrip.

Bullock said it's hard for a lot of families who are sending their children to college because it's not been a great year for agricultural commodities, and it would be a double hit to balance the budget by raising taxes on them.

Bullock said he's trying to reach out to work with legislators who say it doesn't make sense to balance the budget on the backs of college students.

"Yeah, it's hard when folks are having a tough time. Yeah, it's raising the cost of a pack of cigarettes. Is that going to hurt someone? Yeah. But we aren't raising the cost of some farm implements or things like that … We either say, 'To hell with higher education, to hell with health care,' or we find a responsible way to do this," Bullock said.


Bullock said he's been talking to Republican legislative leadership — to Knudsen, to Thomas, to Senate President Scott Sales, to the finance chairs — and to Democrats and other Republicans not in leadership. He said after a legislative committee meeting last week where lawmakers weighed in on the cuts, the message he got was that legislators "realize it's not a responsible thing to do just by cutting the same services they included in their budget."

He isn't ready to talk about what programs listed among the cuts he thinks can't be eliminated or which could be reduced and cause the least pain. He's still working through the 111 pages detailing health department cuts.

"I haven't set a date for the cuts or a special session," he said but indicated action would be this year. Waiting means cuts would just have to be steeper as agencies spend more than what they're able to.

By the end of November, the state could hit a cash-flow problem. Payments to schools are due, and there's not enough money to make them.

"I don't raise all of this to say, 'Oh, this is scary,'" Bullock said. "What I'm saying is, 'That's all real.' If we don't find another path — because the limits of what I can do is only cut, and principally through those agencies."

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