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Week 14 — Piecing together the budget puzzle

As of mi-day Friday, 1,271 bills had been introduced and at least 135 had been signed into law. This week we’re watching how lawmakers are piecing the budget puzzle together. Major questions remain about new tax cuts, funding state agencies, what to do with federal stimulus, and recreational marijuana. Much of this work is under a Thursday deadline for appropriation and revenue bills, including regulations for marijuana, to move from one chamber to the other.

The federal stimulus in the American Rescue Plan Act has given lawmakers a lot more money to work with this session. Legislators are making plans for how to spend more than $2 billion in a bill nicknamed “the beast,” which has passed the House and is now in the Senate. 

Republicans nationally have slammed the federal stimulus bill, which passed Congress solely with Democratic support. State Republican leaders have raised similar concerns over its impact on the national debt, while also making plans for spending the money. 

“This federal spending is reckless. But here in Montana, we’re going to be good stewards of the dollars,” Gov. Greg Gianforte said at a press conference last week.

Both Republicans and Democrats are framing the stimulus as a chance to position Montana’s economy for post-COVID prosperity.

Some of the big-spending targets state lawmakers have so far agreed on in “the beast” bill are infrastructure, primarily water and sewer projects, and broadband connectivity.  

Lawmakers have settled on these projects because they’re one-time-only costs that won’t need continued funding after the stimulus money is gone. 

In a more controversial move, Republicans have added a section to the state stimulus bill that would let the state cut local government grant funding by 20% if that local government has stricter COVID-19 restrictions than the state. Democrats are accusing Republicans of extorting cities, and Republicans are saying the state needs to move forward out of the pandemic.

Republicans have resisted Democratic attempts to add direct payments up to $2,000 for essential workers, similar to federal individual stimulus payments, to the bill. 

The windfall of federal money is also complicating the goal of GOP lawmakers and the Gianforte administration of advancing tax cuts promised during their election campaigns. The American Rescue Plan Act includes a provision intended to keep states from using stimulus money to offset tax cuts.

Montana Attorney General Austin Knudsen has joined 31 states in suing the U.S. Treasury Department over the rule, saying it’s an “egregious power grab”  to prevent states from enacting tax cuts. 

Lawmakers and Gianforte have said they aren’t too worried about the rule because Montana is set to see a new revenue stream from taxing recreational marijuana sales, but it’s still unclear how the federal government will enforce the rule and how that might impact Montana. 

Three differing proposals for how to regulate and tax recreational marijuana are under consideration in the House, drawing attention to their potential social impact and budget implications. Lawmakers are debating under a time crunch as policy bills face a Thursday deadline to advance out of the House.