After weeks of speculation, Gov. Steve Bullock announced Monday that he will call state lawmakers back to Helena to address the state’s budget deficit.
Bullock said a special legislative session will start next week. The first hearings will be scheduled for Monday, Nov. 13, while the session will officially open on Nov. 14.
Bullock, a Democrat, said a special session is the best way to deal with Montana’s budget gap.
“It’s time that Montana leaders fulfill our responsibilities to the people we represent, and balance our budget in a way that makes sense for Montana taxpayers, workers, families and communities,” he said.
The state is facing a projected budget deficit of $227 million, after a year of record-high firefighting costs and lower-than-expected tax revenues.
Bullock was authorized to make cuts of up to 10 percent in state agency funding in order to close the gap. In September, agencies laid out what effects those reductions would have.
“It became clear to me that these cuts would have long-lasting and damaging impacts to essential services Montanans depend on and deserve,” said Bullock.
Instead, Bullock said he’s making a proposal based on thirds. He intends to make $76 million of cuts to state agencies, enough to cover one-third of the deficit. Some agencies, like the Departments of Commerce, Labor and Industry, Agriculture and Livestock, will receive full 10 percent reductions. The proposed cuts will be greatly scaled back for others, like the Department of Corrections, the Department of Public Health and Human Services and the Commissioner of Higher Education.
Another third of the deficit would be paid for with new temporary revenue sources. Bullock has proposed a 3 percent increase in the accommodations tax, which applies to places like hotels and campgrounds, and a 6 percent increase in taxes on rental cars. He also suggested a 3 percent fee on a portion of the Montana State Fund’s investment portfolio.
The remaining third would come from transfers out of various special revenue accounts, along with other legislative changes.
Bullock said he’s talked to legislators from both parties over the last few weeks, and these proposals are the most likely to receive the needed support.
“What we’re proposing is what I think is the closest we’ve come to consensus on both sides thus far,” he said.
But Bullock’s announcement immediately drew opposition from state Republican leaders.
House Speaker Austin Knudsen criticized the governor over the cost of holding a special session, and said it shouldn’t be the first step in addressing budget issues.
“Let’s be clear here: the governor expects the Legislature to raise taxes on hard-working Montanans before any effort to reduce non-essential services has been made,” Knudsen said.
Debra Lamm, the chair of the Montana Republican Party, released a statement accusing Bullock of “mismanaging” the budget and calling for cuts to “bloat and bureaucracy in Helena.”
“Montanans should not have to pay the price with higher taxes because of Bullock’s political games and reckless spending spree,” she said.
Rep. Rob Cook, a Republican from Conrad, said he’s doubtful lawmakers from his party will support any solution involving taxes or budget transfers, unless Bullock considers a $30 million offer from the operator of a private prison in Shelby. CoreCivic, the company that runs Crossroads Correctional Center, offered the money to help resolve the budget issues – if the administration would extend the company’s contract for another ten years.
“I think that’s a Republican rallying point,” Cook said. “Who wants to raise taxes when that money is on the table?”
Crossroads Correctional Center is in Cook’s House district.
The proposal to levy a fee on the Montana State Fund’s holdings, drew sharp criticism from Laurence Hubbard, the fund’s president and CEO. He said the idea raises legal questions, because state law requires that money to be used only for State Fund purposes.
“The fee is really nothing more than a tax on our customers, because our increased costs are going to have to be covered somehow,” Hubbard said.
Democratic leaders in the Legislature were more supportive of Bullock’s plans. House Minority Leader Jenny Eck of Helena said Democrats would have preferred to close the budget gap in different ways, but this proposal is a good compromise.
“I hope that the folks who are out there saying ‘No’ look for a way to say ‘Yes,’ and try to find a solution,” Eck said.
Democratic Sen. Jon Sesso of Butte, the Senate Minority Leader, called Bullock’s proposals a “responsible mix” of cuts, transfers and taxes. He said these specific tax increases were chosen to target visitors to Montana, not the general population, and that he hopes Republicans won’t oppose them solely on ideology.
“We’re ready to talk, to debate, to shape this package that will get the proper number of votes,” said Sesso.
Despite the disagreements, Bullock said he’s confident lawmakers will quickly come up with a satisfactory budget framework.
“No one believes there’s a perfect solution, a solution that will make everyone happy, but we agree on more than we disagree,” he said.