Dems want $1 billion of Montana’s budget surplus spent on housing, childcare and mental health

Legislative Democrats said Wednesday they want to spend Montana’s sizable budget surplus on a billion-dollar effort to help residents who are struggling with the cost of housing, property taxes, childcare and mental health services.

Their proposal, announced at a press conference at the state Capitol in Helena, would put $500 million toward building subsidized housing for rent or purchase, $250 million to property tax relief, $125 million to childcare affordability, and $125 million to increased funding for mental health services.

Some parts of the plan could in theory be implemented by Republican Gov. Greg Gianforte in the short term, and others would require action during the 2023 Montana Legislature. Barring a major upset in this fall’s elections, Democrats will likely head into next winter’s legislative session as the minority party, meaning the process of writing the state’s next two-year budget would remain largely controlled by majority Republicans and the Republican governor.

Regardless, Democrats insisted Wednesday that their ideas represent vital opportunities to address cost-of-living concerns that are increasingly painful for many Montana families.

“We’re hearing over and over again that it’s hard to live in the community where you work, businesses are having trouble hiring employees, it’s hard for folks who want to re-enter the workforce who got hit incredibly hard the last two years, to find childcare that’s affordable,” said House Minority Leader Kim Abbott, D-Helena. “What we’re hearing is that we need solutions.”

“There is plenty of grain in the grain bin, and it’s time to give that grain back to the people who put it there in the first place,” said Rep. Mary Caferro, D-Helena.

The Legislature’s nonpartisan fiscal analysts said last month that they expect state revenues for the 2022 fiscal year to be between $1 billion and $1.4 billion higher than the figure the state used to build its current budget during last year’s legislative session. That difference is largely due to higher-than-expected tax collections, especially from personal income taxes, which are the state’s most important revenue stream.

Fiscal analysts have cautioned that revenues are up in part because of high inflation, which boosts tax collections as employers give workers cost-of-living raises, but also means the state has to pay more to cover its operating costs and keep its own workforce from leaving for other jobs.

Inflation has been on the rise globally as the COVID-19 pandemic has receded, driven in part by government stimulus programs that kept dollars in consumers’ pockets through the crisis and in part by supply-chain snafus that limit the products available for consumers to buy. As higher costs for gas, groceries and consumer goods squeeze Americans, the inflation trend has become a significant political liability for President Joe Biden and Democrats nationally.

Abbott said Wednesday that she doesn’t think the additional state spending proposed by her party will make inflation worse in Montana.

“Inflation is a national, or an international problem. We’re not going to fix it in the state of Montana. We’re not going to make it worse in the state of Montana, either,” she said. “What this is is an investment in communities that need it, to make sure that people can work and take care of their kids.”

The price of housing, both sale prices and rental rates, has become a particularly acute cost-of-living issue in many parts of the U.S. in recent years, including much of Montana, as pandemic-era migration into the state squeezes existing housing supplies. A poll conducted earlier this year found that more than three-quarters of Montanans consider “lack of affordable housing” a “very serious” or “extremely serious” problem.

Sen. Pat Flowers, D-Belgrade, said at Wednesday’s press conference that streets in parts of Bozeman are lined with cars and campers used as ad hoc housing by working residents who can’t find other places to live.

“Housing is, without a doubt, the No. 1 issue in Montana,” he said. “This is an immediate crisis.”

The Democratic proposal would put $500 million toward workforce housing efforts, including a major funding increase for an existing state program that subsidizes apartment-style housing complexes where units are priced at rents affordable to residents with below-median incomes. The state Department of Commerce says the program’s current $15 million authorization is enough to support six projects.

Democrats also say they want to put some of that money into a program that would provide low-interest or no-interest loans to private developers and nonprofit organizations that build affordable homes for rent or purchase.

“There are a lot of factors that affect the skyrocketing price of real estate in Montana, but we also know that housing supply is one component, and probably the key component for prices,” Flowers said. “We have more people moving into Montana and that trend has exceeded our existing supply. And we’re simply not building fast enough to meet that demand.”

Democrats also said that property taxes are a pinch point for Montanans who already own homes. Their $250 million property tax relief proposal would include a one-time refund on this year’s property tax bills and an ongoing program that limits tax bills to a set percentage of residents’ annual income.

Democrats proposed a series of similar property tax “circuit breaker” bills during last year’s session but saw those proposals voted down by Republicans as GOP lawmakers and the Gianforte administration chose to prioritize income tax cuts instead. While Democrats argued that income tax cuts disproportionately benefit higher earners, Republicans maintained that lower income taxes would attract entrepreneurs and make it easier for Montanans to find higher-paying jobs.

The $125 million Democrats want to put toward childcare could provide low-interest loans and grants to people who want to open childcare businesses in places with limited options, help existing providers expand by subsidizing employee wages, and expand scholarship programs to help middle-income families afford care. A 2020 study by the Montana Department of Labor & Industry found that licensed childcare capacity in the state covered less than half of estimated demand.

Democrats also said Wednesday that they want to put $125 million toward mental health services, restoring cuts made during the state’s 2017 budget crisis and putting more money toward mental health services offered through schools.

Senate Majority Leader Cary Smith, R-Billings, dismissed the press conference in a written statement, which didn’t address any of the Democrats’ specific proposals.

“It’s very nice of the Democrats to hold a press conference touting how strong Montana’s economy, record employment, and tax revenues are under Governor Gianforte and the Republican Legislature’s leadership,” Smith wrote.

“Republican lawmakers look forward to continuing to be good stewards of Montana’s economy and providing further tax relief for Montanans,” he said.

In a written statement, Gianforte’s office said Wednesday that the governor is hearing that Montanans’ biggest concern is “skyrocketing inflation,” which it blamed on President Biden.

“Joe Biden and Democrats’ reckless, out-of-control spending is driving inflation to a 40-year high and forcing Montanans to pay more for gas, groceries, and a roof over their head,” said spokesperson Jack O’Brien. “We welcome Montana’s Democrat legislators to join us in calling on Joe Biden to stop the reckless spending and get inflation under control.”