Gianforte budget calls for multiple tax reductions

HELENA — Republican Gov. Greg Gianforte, sworn in to office Monday, unveiled his first two-year budget proposal Thursday, saying the state can reduce taxes and invest in some of his priorities while leaving its reserve accounts healthy.

“We’ve held the line on new spending — that’s where the funds come from to provide tax relief, invest in new trades and combat the drug epidemic,” Gianforte said at a press conference.

The proposal comes as a counterpoint to an earlier budget introduced by now-former Democratic Gov. Steve Bullock in November, which included measures like a $10 million early childhood education program that has been stripped from the Gianforte proposal.

Gianforte said his budget calls for $100 million less in General Fund spending than did Bullock’s — a number he said was produced primarily by avoiding new agency spending instead of slashing into services.

“These are not cuts to underlying essential services,” Gianforte said.

Kurt Alme, Gianforte’s budget director, said Thursday that the administration’s budget also relies in part on skipping some contributions to certain state pension and health insurance plans that are currently running a surplus.

Alme also said that the Gianforte proposal includes the $499 million infrastructure package proposed in the Bullock budget, including $91.5 million in bonded projects.

Gianforte’s budget calls for a number of tax reduction measures, each of which will need to pass the Legislature as bills separate from the primary state budget bill, House Bill 2. Among them is a reduction of the marginal rate levied on Montana’s top income tax bracket, which starts at an income of $18,400 a year, from 6.9% to 6.75%.

Gianforte also wants to create a capital gains tax break designed to encourage Montana-based entrepreneurship and exempt more small businesses from paying the state’s business equipment tax, raising the threshold at which businesses start paying that tax from $100,000 worth of equipment to $200,000. His proposal also calls for putting more money into a property tax reduction program for low-income homeowners.

Beyond lowering taxes, Gianforte wants to put $2.5 million into a program designed to boost pay for early career teachers and an additional $1 million in trades education. He also calls for putting $23.5 million toward substance abuse prevention programs, hiring 14 more probation officers, and adding new district court judges in Bozeman and Kalispell.

In total, Gianforte’s proposal calls for $5.3 billion in state General Fund spending over the 2022-23 biennium, which runs from July 1, 2021, through June 30, 2023. That’s a 3.8% increase over the 2020-21 biennium, according to summary tables provided by the governor’s budget office Thursday.

Overall state spending for the 2022-23 biennium under Gianforte’s budget would be more than twice the $5.3 billion figure, which doesn’t include federal money passed to the state and other spending routed through accounts other than the state General Fund.

Senate President Mark Blasdel, R-Kalispell, issued a noncommittal statement on the budget Thursday, saying through a spokesman that “Senate Republicans look forward to reviewing Governor Gianforte’s budget proposal in detail and working with the governor to enact a conservative budget that includes Republican priorities.” 

Senate Minority Leader Jill Cohenour, D-East Helena, and House Minority Leader Kim Abbott, D-Helena, also issued a statement Thursday:

“The Governor’s proposal is the starting point of a lengthy legislative budget process,” they said through a spokesman. “Democrats are committed to creating jobs and opportunity for all Montanans, and that means holding the line on unnecessary cuts made on the backs of working families to pay for tax breaks for the wealthy.”

Gianforte’s proposal now heads through the legislative appropriations process, where the Legislature will use it as a starting point to debate how much state agencies should be authorized to spend. Once budget bills are approved by the Montana House and Senate, they’ll head back to Gianforte for his signature.