MTPR

Revenue Estimates Loom Large As State Budget Advances

Mar 28, 2017

Governor Steve Bullock's office warned lawmakers Tuesday that they’re risking a special legislative session and budget cuts if they rely too much on new, more optimistic state revenue projections to fund the state budget.

Bullock’s Budget Director Dan Villa told a committee of House lawmakers Tuesday that the new revenue projection showing an additional $106 million coming in over three fiscal years shouldn’t necessarily be taken to the bank. The revenue projection comes from nonpartisan fiscal researchers in the state capitol.

Credit William Marcus

Republican lawmakers are expressing more confidence in the projections, but Director Villa said more sure are tax increases the governor has proposed to address the budget shortfall.  

"The actions you take today will be the single most important vote of this session thus far as to whether there is a special session in the next biennium," Villa says.

Special session, meaning lawmakers would have to come back to Helena sometime in the next two years to fix budget shortfalls. State law requires the Legislature to balance the state budget by the end of the legislative session.

Villa says if the revenue projection is wrong, it could result in the state's general fund falling dangerously low, requiring the governor to call a special session to fix the budget:

"So I think it does behoove us to precede lightly and to be very cautious with how we adjust these revenues, because the expenditures are not shrinking," Villa says. "Revenues enhancers, as you know in this committee, are not going anywhere."

Revenue enhancers are what the Bullock administration is calling a slate of proposed tax increased. During his testimony,  Villa took a jab at Republicans who oppose them.

Republican Speaker Pro-tempore Greg Hertz from Polson says the issues with the budget are a short-term problem, which taxes aren't a fix for.

"To me, it seems like I’d rather err on the side of the possibility that our revenue will turn around more quickly instead of putting the burden on the taxpayers of Montana just to avoid the special session."

There is no timeline for when lawmakers will vote to add or reject the new revenue projections.

The state budget, known in the legislature as HB-2, has already passed the House, and on Tuesday passed out of a Senate committee.

Conrad Republican Llew Jones chairs that Senate committee and says he supports adopting at least some of the new projected revenue:

Sen. Llew Jones (R) SD9
Credit Montana Legislature

"I would say not using any of it would be a mistake. I would suggest that, potentially, not using all of it would be a mistake as well," Jones says. "Obviously they heard the information presented on both sides and are going to, based upon a preponderance of what they’ve seen, react. But from what I’ve seen of the revenue estimates, I would have an increased comfort level in adopting at least some of it." 

Before the budget passed out of the Senate committee, senators restored funding to programs previously cut by lawmakers in the House.

That restored funding includes $10 million for nursing homes in Montana’s senior and long term care programs, just over $1 million for special education programs, and $1 million for a grant program for youth suicide prevention.

The Senate rejected a proposal to fund a $5/hour pay increase for child protection specialists in the Child and Family Services division.

It also rejected adding back $20 million to the budget for the state's university system.

The state budget will now head to the Senate Floor for debate.