The Bullock administration’s new budget released Tuesday outlines an increase in state spending of just over one percent over the next two years. This despite declining state revenue from the sales of coal, oil and gas.
The Governor's Budget Director Dan Villa says the budget has three main principles.
"Three hundred million ending fund balance; spend less than we take in; and that the Legislature has to follow the same fiscal standards that the executives has to."
But a little over an hour after Governor Bullock released his revenue and spending plan, Republican state lawmakers said they're not impressed.
"I would call it grossly irresponsible," says Scott Sales, president of the Republican-majority Montana Senate.
"The bottom line is it looks like the governor is going to ask for some kind of revenue increase, which is a tax increase, and I don’t think there is much of a stomach for that from our Republican caucus. We came here to live within our means, not further burden the private sector with higher taxes," Sales says.
The proposed budget does include tax increases. Those would fall on people making more than $500,000 a year, and there would be new consumption taxes on vapor cigarettes and medical marijuana.
But Bullock's Budget Director Dan Villa says the budget also includes cuts to some state agencies.
"All agencies see some reductions. The ones that see an increase of some sort — new proposals — we fully fund HELP Act and Medicaid at DPHHS, as well as fully fund caseload and some, what I'll call catchup money at Child and Family Services Division. We fund our jail holds at the Department of Corrections, and then we fund K-12 inflation."
One of the biggest spending asks in the governor's budget is for infrastructure investment. The budget outlines more than $292 million in projects.
"Water, sewer, bridges," Villa says.
Republican lawmakers say they want to invest in infrastructure too, but a spending bill to do that failed last year because they weren't willing to go into bond debt to do so.
Governor Bullock maintains that with interest rates at historic lows, it's OK for the state to borrow more than $150 million to build things like a Veterans Home, renovation on buildings for Montana State University, and a new building for the Montana Historical Society.
But not all of those projects look like "infrastructure" to Republican House Speaker Austin Knudsen.
"When we’re looking at the governor’s proposal here and he’s got capital projects improved in here, that’s something that I talked yesterday about after the caucuses, I don’t consider capital projects to be essential infrastructure," Knudsen says.
That disagreement is sure to be one of the major disputes of the upcoming legislative session.
Governor Bullock's budget director Dan Villa:
"To say that the infrastructure of the state doesn’t include University System facilities, as it has, that is a departure that I just don’t know Montanans are ready to make."
It will be up to state lawmakers to decide what their constituents will stomach in terms of state spending and taxes. In his budget announcement Tuesday, Governor Bullock laid out his party's priorities.
"The budget that I present today reflects the policies and proposals that I've put forth over the course of this last year," Bullock said. The budget's built around the priorities of fiscal responsibility, job creation and business incentives, tax fairness for middle class families and Main Street businesses, educational opportunity, and caring for Montana's families and children, and infrastructure investment."
Republican leadership says they’ll have more to say on the governor’s proposed budget once they have a better idea of how much money is coming into the state and where it's coming from. They'll get details Thursday, when the Revenue and Transportation Interim Committee meets for the final time before the session.