HELENA — Racing to beat a procedural deadline, Montana lawmakers have advanced a first-draft plan for spending billions of dollars in federal stimulus money through the state House just three weeks after President Joe Biden signed the nation’s latest coronavirus relief package into law.

The plan, enshrined in House Bill 632, details spending for more than $2.3 billion of the roughly $3 billion expected to flow through state government under the new stimulus act, the American Rescue Plan Act, or ARPA. It directs that money, a massive influx of cash equivalent to about $2,800 per Montana resident, toward spending on infrastructure, business support, social services and education — investments that proponents say will help carry Montana into post-COVID prosperity.

“Right now out in Montana there are existing needs,” said sponsor Frank Garner, R-Kalispell, as he introduced the bill on the House floor Wednesday. “This is going to give us the opportunity to meet them. But it is also going to give us the opportunity to build bridges to the future.” 

The stimulus bill will likely be amended as it moves through the Senate, both with minor provisions aimed at clarifying its details and, potentially, more significant changes to how it directs funding.

The largest chunk of spending in the House version of the bill is $619 million for infrastructure, filling a pot of money that will be used both for state building projects and grants to help cities, towns, counties and tribal governments work through their wish lists of public works. That money will be allocated through a nine-member infrastructure advisory commission that solicits applications from state agencies and local governments this summer before making recommendations to Gov. Greg Gianforte.

Lawmakers have also put stimulus money toward a slew of infrastructure projects that were already set for funding this year, saving money designated for those projects for use down the road. For example, the stimulus bill picks up the tab for $56 million in state building projects that were going to be funded through House Bill 14, the Legislature’s routine bonding bill.

Additionally, the stimulus bill provides $250 million for grants for building communications infrastructure such as broadband internet lines and cell towers. That’s $100 million less than the $350 million broadband request made by Gianforte’s commerce department director, Scott Osterman, in mid-March. That money will be allocated through a nine-member communications advisory commission, which will also make recommendations to the governor.

Much of that infrastructure spending is coming from a $910 million chunk of flexible relief money allocated to Montana by the federal bill, through a provision intended to help states cover COVID-related spending and patch pandemic-worn budgets. Because Montana’s budget outlook was fairly bright even before the new federal stimulus bill, legislators have been able to lean on a provision that lets states spend their relief money on water, sewer and broadband projects.

Beyond infrastructure, the state stimulus bill outlines $150 million intended to stabilize businesses harmed by the COVID-19 pandemic and public health restrictions aimed at curbing the spread of the virus. That money will be allocated through a third advisory commission.

Another $213 million is provided for housing programs to be administered by the Department of Commerce. Of that sum, $152 million is directed to emergency rental assistance and $50 million to mortgage assistance programs.

Bill proponents have said that delegating some details to the advisory commissions and the governor’s office is a way to keep the stimulus money somewhat flexible as it becomes clearer where the state economy is hurting most moving out of the pandemic.

Leaving wiggle room will also help the state navigate one of the major headaches lawmakers have faced in interpreting the federal stimulus bill: In many cases, federal agencies haven’t yet drafted specific rules on how the state can spend particular pots of the money.

For example, some Republican lawmakers are skeptical the state can effectively spend the full $152 million allocated to Montana for rental assistance programs, and would like to put that money to other uses. In its current form, HB 632 includes language that aims to use that rental assistance money on nursing homes, group homes and prisons by saying it should be applicable “any place where someone pays on a periodic basis for shelter.” It isn’t yet clear, however, whether that will pass muster with federal bureaucrats.

It’s also unclear precisely how Montana’s stimulus plans will be affected by a provision in the federal act that aims to keep states from using COVID relief dollars to fund tax cuts. Several Gianforte-backed tax cut bills are pending before the Legislature, and Montana Attorney General Austin Knudsen announced Wednesday that Montana is joining a 13-state lawsuit against the Biden Treasury Department. The lawsuit alleges the non-tax-offset provision constitutes federal overreach.

The state stimulus bill also includes nearly half a billion dollars for health and social service programs and education, with much of that spending tightly defined by Congress. For example, the bill includes $134 million for COVID-19 testing and contact tracing, $130 million for the Supplemental Nutrition Assistance Program, formerly known as food stamps, and $111 million for childcare support grants.

About $347 million in ARPA stimulus money will also head directly to K-12 school districts. Additional funding will be directed to the state university system, including $7.5 million for the Montana Research and Economic Development Initiative, which works to translate academic research from Montana universities to the private sector. 

The state stimulus bill doesn’t include spending from the ARPA package that is issued directly by federal agencies, such as individual stimulus checks paid out through the Internal Revenue Service. It also doesn’t include stimulus spending from prior relief bills, such as the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, passed by Congress last spring, and the CARES II relief measure passed last December.

Montana’s share of CARES funding, including its $1.25 billion Coronavirus Relief Fund, was allocated by then-Gov. Steve Bullock, and $590 million in CARES II relief has been appropriated through other bills, most notably House Bill 630.

Additionally, HB 632 leaves some stimulus money in reserve. Since most of the ARPA dollars don’t need to be spent until the end of 2024, legislators will have a chance to make further allocations either through a special session or the regularly scheduled 2023 session.

Also absent from HB 632 in its current form are direct payments for lower-income essential workers, something minority Democrats have advocated.

Democrats initially wanted to provide essential workers with $2,000, then brought an unsuccessful amendment on the House floor Tuesday that would have edited the state stimulus bill to offer $1,000 payments to essential workers who earn $30,000 or less a year.

Republicans pushed back on that proposal, saying it’s difficult to come up with a fair definition of who precisely has been an essential worker over the course of the pandemic. They also argued that it’s better to invest the stimulus money on things that build up the state economy rather  than to offer aid to people on a one-time basis. The Democratic direct payment amendment was voted down on close to party lines.

Democrats have also said they’re troubled by a provision in HB 632 that reduces the amount of stimulus money available to local governments that maintain stricter COVID-19 health measures than the state as a whole. In the bill’s current form, for example, a city or tribal government that insists on keeping a local mask mandate in place or issues a business shutdown order during an upswing in cases would have state grants from stimulus money cut by 20%.

Republicans have argued that extending pandemic health restrictions longer than necessary is a drag on the economy and that the provision is a reasonable way to induce overly cautious local governments to return their communities to business as usual.

Some Republican critics of the bill, for their part, said in committee and floor debates this week that they think the stimulus plan is too wasteful to win their support. 

The state stimulus bill passed its final vote in the House 83-14 Thursday, with opposition from a handful of hardline Republicans and roughly a third of the Democratic caucus. Its next stop is the Senate Finance and Claims Committee.

This story has been updated to note that HB 632 passed its final House vote Thursday. It previously passed an initial vote Tuesday.

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This story is published by Montana Free Press as part of the Long Streets Project, which explores Montana’s economy with in-depth reporting. This work is supported in part by a grant from the Greater Montana Foundation, which encourages communication on issues, trends, and values of importance to Montanans. Discuss MTFP’s Long Streets work with Lead Reporter Eric Dietrich at edietrich@montanafreepress.org.

Eric Dietrich is a journalist and data designer and the founder of the Long Streets economic reporting project. His reporting focuses broadly on Montana’s governance and economic opportunity, with particular focus on the state budget and tax policy. He also contributes data reporting across the MTFP newsroom. Before joining the MTFP staff in 2019, he worked for the Great Falls Tribune, Bozeman Daily Chronicle, and Solutions Journalism Network and also earned an engineering degree from Montana State University. Contact Eric at edietrich@montanafreepress.org, 406-465-3386 ext. 2, and follow him on Twitter.