Legislature set to pass budget for state spending

Caven Wade

(UM Legislative News Service) As the 68th Legislative Session approaches the end of its 90-day ride, lawmakers are close to passing a $14.3 million budget for state spending over the next two years, funding everything from Medicaid to education to law enforcement.

The Montana Legislative Branch only has one constitutional requirement and that is to provide a balanced budget for the next two years. House Bill 2, sponsored by Rep. Llew Jones, R-Conrad, is the key bill that holds that budget. Other appropriation bills are brought into the process to help direct how some of that money is spent. 

The budget in HB 2 totals about  $14.3 billion and is broken up into five different sections: health and human services, natural resources/transportation, public safety, general government and education. The bill sets spending for two fiscal years, with $7 billion being allocated to 2024 and $7.3 billion being allocated in 2024. The total budget is more than the governor's original proposed budget by about $1.5 million. The 2024-2025 biennium budget is $1.66 billion more than the 2022-23 budget, which totalled about $12.7 billion. 

“Our final legislative budget is a good conservative budget that we can all be proud of. From east to west. From urban to rural. It’s a budget that will allow the executive branch to efficiently and effectively operate our state government in the next two years, and most importantly it’s a budget that’s not only good and fair for the pocket book of every Montanan, but it also helps Montana’s small businesses in our communities across the state,” said Sen. John Esp, R-Big Timber, who carried the bill on the Senate floor. “It helps vulnerable Montanans in their time of need, our local school districts, our university system and our public safety system to make sure Montana remains a safe place to raise a family.”

Senate Minority Leader, Pat Flowers, D-Belgrade, spoke on behalf of the Democratic party to address the budget on the Senate floor. He said that the budget fails to meet the greatest needs of Montanans and doesn’t do enough to address issues like funding for nursing homes, low income housing and hungry elementary-aged students. A bill that would have provided free lunch to all Montana students died early in the legislative process.

“Montanans depend on us to draft a budget that addresses the greatest needs of all Montanans, and in my mind we have failed to meet those needs in this budget. We heard amendment after amendment where we failed to meet those needs,” Flowers said.

He said allocations are misplaced and pointed to the legislature growing state government funding by 7%, and reaching about $1 billion in what he called “bureaucracy.” He said the state is setting itself up for a budget crisis in the next biennium because the legislature has increased spending, but cut parts of incoming revenue.

“That doesn’t work for my budget, it’s not going to work for our budget here either, and I think it’s short-sighted and misguided,” Flowers said.

Gov. Greg Gianforte’s key priorities for the budget included $1 billion in property and income tax relief for Montanans and the ability to pay off the state debt.

The Legislature passed several bills this session that the governor has already signed into law including: 

• House Bill 192, sponsored by Rep. Bill Mercer, R-Billings, which spends $480 million on income tax rebates. It pays $1,250 for an individual, or $2,500 for spouses who file together. 
• House Bill 222, sponsored by Tom Welch, R-Dillon, which spends $284 million on immediate property tax rebates.
•  House Bill 251, sponsored by Llew Jones, R-Conrad, which allocates $100 million to pay for some of the state debt. 
• Senate Bill 121, sponsored by Becky Beard, R-Elliston, which reduces the state's top bracket income from 6.5% to 4.9%, and will cost the state around $150 million.

The first section of HB 2, Section A, covers “General Government,” and has the smallest dollar amount attached to it at $799 million over the biennium. Section B, which covers public health and human services, is by far the biggest part of the budget, sitting at a total of $7 billion over two years and almost half of the overall spending for the state.

The entirety of Section B is allocated to the Department of Health and Human Services, which then allocates a large portion of the funds to the Health Resources Division. That division oversees Medicaid, the government-run health insurance program for low-income Montanans. Senior and long-term care services also take a big chunk of the DPHHS money. HB 2 appropriates $365 million in 2024 and $399 million in 2025 to the senior and long-term care services. 

The legislative session starts with subcommittees that hear public testimony and set spending on each section of the budget.Then, the House Appropriations Committee takes over to keep hammering out the details. That committee passed HB 2 on a 16-7 vote on March 15. House Democrats tried to amend the bill 14 times during the floor discussion on the bill shortly after, and all of the proposed amendments were voted down on party lines. The bill passed the House 67-31 on March 23, with every Republican voting for it and every Democrat voting against it. 

HB 2 then went to the Senate Finance and Claims Committee, which passed it unanimously on April 13. The Senate proposed 26 amendments to the bill during the floor discussion on April 24, and passed eight of them before passing it 32-18 on April 27. The bill will now be sent back to the House where it can either be confirmed with amendments or the amendments can be rejected which would send the bill to a conference committee where legislators from both the House and the Senate would meet to iron out the details.

While the health and human services section takes the lion’s share of the spending and arguably gets the most attention, education, natural resources and law enforcement are not far behind. 

Section C covers natural resources and transportation. That section holds allocations of $1.2 billion in 2024 and $1.3 billion in 2025 totalling $2.5 billion over two years to provide financial resources for the needs in those areas.

Two-thirds of the spending in Section C goes to the Department of Transportation to be used on monitoring, maintenance and construction of transportation lines across the state. The second biggest allocation in this section goes to the Department of Fish, Wildlife and Parks for conservation management of wildlife across the state.

Section D deals with the allocation of money to public safety services. The current proposal would allocate $514 million in 2024 and $517 million in 2025 over the two year period for those services.

The Department of Justice and Department of Corrections collects the vast majority of that money. The DOJ will receive $295 million over the biennium, while the DOC will receive the most money in the section totalled at $511 million. The money is used to maintain law enforcement efforts throughout the state, and maintain state-run prisons and correction centers.

Section E deals with educational expenses across the state and has the second largest appropriation in the bill. The section holds a total of $3 billion over two years with $1.47 billion allocated in 2024 and $1.53 million in 2025.

The biggest portion of the education section, $2.3 billion, goes to the Office of Public Instruction, to support public schools and education across the state for children. The bill also allocates money to things tied to this section like the Montana Historical Society and the Montana School for the Deaf and Blind.

“I think we had a very good session and year, and this is the accomplishments of what we did,” said Sen. Daniel Salomon, R-Ronan, when referring to Section E on the Senate floor.

Senate Majority Leader Steve Fitzpatrick, R-Great Falls, said from a fiscal point of view, this has been the hardest session that he has seen because  there's so much money to be allocated. The Legislature started the budgeting process with a $2.5 billion surplus.

“In fact, I think the problem is there's too much money. So when I look at the budget, and knowing that we have a lot of money, and we have tremendous pressures from inflation, and all the other things that have gone on in this economy,” Fitzpatrick said.

He lauded the Finance and Claims Committee for refining a budget that he said works for Montanans needs while also being fiscally responsible.

“This has been a difficult session on the fiscal issues, and I don’t think there’s any doubt about it. It takes a lot of strong will to say no and say no routinely, because the fact of the matter is that there is always going to be more pressure. More demands for spending, and I think the Finance and Claims Committee and the House Appropriations Committee deserves a lot of credit for holding the line. Doing a good job, and making sure we have a responsible budget going forward in the future,” Fitzpatrick said.