MTPR

Montana Lawmakers Debate Gov's Proposal To Fill State Budget Shortfalls

May 9, 2018

Budgets within Montana’s state health department and office of public defender are busted.

Lawmakers in the Legislative Finance Committee Wednesday debated a proposal from Governor Steve Bullock to borrow more than $23 million from next year’s budget to pay for the state’s current financial troubles.

Most of the money in the proposal would go to fund Department of Health and Humans Services budget items that are currently in the red.

That request is for just over $20 million in the general fund set aside for the 2019 budget to be used for the state’s costs for Medicaid caseloads, the Montana State hospital, and other operating expenses this year.

$3 million is also proposed to fill spending gaps within Office of the State Public Defender.

This kind of borrowing within the state’s budget is called a supplemental appropriation and used only in unforeseen or emergency situations within government.

State Budget Director Dan Villa sent a memo to legislative staff on March 8 informing lawmakers of the proposal.

"We are not increasing expenditures, we are simply using the two-year budget set by the Legislature more in the first year than in the second," said Villa. 

The Legislative Finance Committee has 10 days to finalize any comment it wants to make on the Bullock administration's proposal. However when the committee met Wednesday, rifts between Democrats and Republics resulted in a stalemate.

Nancy Ballance, the Republican chair of the finance committee, said she’s worried what the overall state budget could end up looking like if this much money is taken out of next year’s budget.

"I am very uncomfortable with not having any kind of plan whatsoever for how to contain the 2019 expenditures," said Ballance. "And I do understand that it is the executive's responsibility to figure that out as they go, but I think some kind of a plan is required in this situation and we should be seeing that."

According to analysis of governor’s proposal by the Legislative Fiscal Division, pulling just over $20 million from next year’s budget to fund DPHHS this year still leaves an expected $30 million shortfall within the health department over the next two years.

"Their plan does not contain spending within the legislative appropriation," said Quinn Holzer of LFD.

Republicans on the finance committee suggested sending a letter to the Bullock administration, pointing out what they say is a significant issue in current proposal. But Democrats stuck together to block the effort.

"No comment is better than making comments. Because if you think you’re going to be able to come up with, or the Legislature is going be able to come up with a better way, then good luck," said Jon Sesso, Montana Senate Minority Leader.

Sesso says the health department’s number one job is to make ends meet this year, in the context of state health officials struggling to deal with $49 million in cuts to the agency made during the November special session.

Without a comment from the Legislature, the clock will wind down on the June 10 timeline for when the Bullock administration can take action on it’s proposal to transfer money into the health department and the public defender's office. With a comment from lawmakers, the transfer could have taken place right away.

Governor Bullock’s Budget Director Dan Villa told MTPR that when Republicans said they were concerned about a plan for how the state will stay within the legislative appropriation, he understood that as hearing that Republicans wanted a list of budget cuts with state government.

Beth Brenneman, a staff attorney with Disability Rights Montana, testified during the finance committee meeting Wednesday. She pointed out that the current supplemental appropriation from the Governor does not include funding for Medicaid community health services.

"We are losing things that we are not aware of quite yet," said Brenneman. "And the devastating impacts will be very obvious. Helena Industries was just the first."

Helena Industries was a non-profit that reportedly provided services for 900 people with disabilities in western half of the state. Staff at the organization say state budget cuts played a big roll in their closing in early April.

Although a group of Democratic state lawmakers have advocated for a supplemental appropriation to cover the ongoing costs to community health services within Medicaid, the Bullock administration has said it wouldn't be allowed under state law.

The governor's budget director says the budget transfers the administration is proposes now are allowed because the shortfalls in these specific areas within the health department were unanticipated.

Both lawmakers and the executive are waiting to see how state revenues will come in the rest of the fiscal year, which ends in June. If revenues are high enough they could be used backfill some of the nearly $77 million in cuts made during last fall’s special session.