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HELENA - By a 2-to-1 margin, the Montana House on Tuesday endorsed the state pay plan that freezes base salaries for many state employees for the next two years and gives a one-time, $450 lump-sum payment to those making $45,000 or less annually.

House Bill 13, by Rep. Chuck Hunter, D-Helena, passed 63-37. It faces a final House vote before moving to the Senate.

The bill incorporates the pay contract negotiated by the Schweitzer administration and unions representing state employees, which recently ratified the pact.

Hunter, a former state employee for 20 years, praised the work that they do and said they deserve legislators' thanks. He called the bill "a bitter pill" for state employees.

"This pay plan is a realistic plan for the times that we're in," he said. "It's an austere plan. It's a responsible plan. Hard times make for hard choices."

The bill will cost an additional $32.5 million for the two years, with $18.7 million coming from the state general fund, Hunter said. The remainder comes from federal and other sources of money within the state budget.

The lump-sum payments for 5,000 employees will cost $5 million, with $3 million coming from the general fund. The pay freeze will affect an additional 5,000 state workers.

It also includes an 8.5 percent increase in state employees' health insurance premiums the first year and an 8 percent hike in the second year. That portion will cost $20 million, with $11.6 million coming from the general fund.

The rest of the money goes for a contingency fund to help state agencies make final payouts for accumulated sick leave and vacation time when employees retire.

Rep. Ray Hawk, R-Florence, opposed the bill.

He said state employees make an average of $36,000 annually, while the average pay for his constituents is $25,000. He estimated that it takes the state income taxes paid by 30 of his constituents to pay the salary of one state employee.

Citing the health care premium increases, Hawk said, "This really amounts to an 8 percent pay raise increase."

What's more, he said, a number of state employees also got pay hikes when the 2007 Legislature approved a "broadband" pay scale.

Meanwhile, many Montanans are seeing their hours reduced or facing layoffs, he said.

"To give state employees an 8 percent a year increase is something I cannot support," he said.

The bill and labor agreement cover executive branch employees but doesn't affect legislative, judicial or university system employees.

In the past, legislative and judicial branches usually have given employees the same percentage raises as those negotiated for the executive branch. The University System negotiates separately with its unions.

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