HELENA — Outgoing Gov. Steve Bullock said Monday that the state government’s full rainy day fund means it can make it through the next two years without raising taxes or cutting services even as the COVID-19 pandemic takes a toll on the economy.
The comments came as Bullock, a Democrat who will cede the office to Republican Gov.-elect Greg Gianforte in January, introduced his proposal for state spending for fiscal years 2022 and 2023, which run from mid-2021 to mid-2023. While Bullock is a lame duck in the governor’s office, the document will serve as a template for Gianforte and the Republican-controlled Legislature as they hammer out a final budget during the legislative session set for this winter.
“This is a budget that does not necessitate any cuts to the government programs and services relied upon by Montanans,” Bullock said at a press conference Monday. “If the next administration and Legislature choose to cut government services, it’ll be based upon ideology, not necessity.”
Gianforte, elected earlier this month, campaigned on lowering taxes and limiting new state spending. A spokeswoman for Gianforte’s transition effort, Brooke Stroyke, said he hadn’t yet had a chance to review Bullock’s proposal.
“With state spending increasing by 60% over the last 10 years, Governor-elect Gianforte thinks it’s critical to hold the line on new state spending,” Stroyke said in an email. “He looks forward to reviewing the proposed budget in full.”
According to a Montana Free Press analysis of data compiled by the National Association of State Budget Officers, per-capita spending by state government, unadjusted for inflation, rose by 42%, to about $6,600 per state resident, between 2008 and 2018. About half that increase was driven by portions of the state budget that are funded by federal dollars, a category that includes the vast majority of the spending resulting from Montana’s expanded Medicaid program.
Bullock’s budget proposal, available in full at budget.mt.gov/Budgets/2023_Budget-Page, calls for $14.2 billion in spending over two years between the contents of the governor’s suggested budget bill and other spending encoded in state law — about $6,600 annually for each Montana resident.
The proposal draws $75 million from Montana’s Budget Stabilization Reserve, the state’s rainy day fund, leaving about $40 million in the account. Bullock’s office says that’s enough supplementary funding to get the state general fund to the far side of the biennium with a $251 million balance, tens of millions above the threshold state law suggests as a comfortable operating reserve.
Bullock also proposes modest investments in education and health services, as well as a $499 million state infrastructure package that includes $91.5 million in bonded projects. The education spending would include $10 million for early childhood education — substantially less than the $30 million proposal the governor pushed for in 2019 — as well as a $72 million inflationary adjustment for K-12 schools and $4.6 million for need-based college scholarships.
The governor’s office also makes a point of noting that the budget fully funds the expanded Medicaid program renewed in 2019 over the objections of hard-line Republicans. According to the state health department, the program currently provides health coverage to nearly 90,000 Montanans.
While Gianforte said during the campaign that he supports the expanded Medicaid program, despite wishing it had stricter enrollment limits, some Democrats have speculated that the program will face the chopping block with the state under unified Republican control.
Responsive to the economic harm wrought by the pandemic and anti-coronavirus public health measures, Bullock’s budget proposal assumes the state will see its annual general fund revenues drop by $94 million dollars in the 2021 fiscal year, which runs through June 2021.
However, the governor’s budget office expects revenues to rebound sharply over the following two years, projecting 2023 revenues nearly $100 million higher than the state’s 2020 collections. Individual and corporate income taxes, which together account for about two-thirds of the state’s revenues, are the primary drivers of that projected increase. According to state law, Gianforte has until Jan. 7 to propose adjustments to Bullock’s budget proposal.
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