Gov. Steve Bullock has three priorities for the upcoming state budget: It should be balanced, support responsible, long-lasting programs and projects, and include a rainy day fund.

While the state Legislature must, by law, produce a balanced budget, legislators have regularly wrangled over the necessity of a rainy day fund or various state programs. But during his budget announcement Thursday, Bullock said he remains the eternal optimist based upon what Montana has accomplished over the past few years.

“I expect the Legislature to work with me on what, at their core, should not be partisan issues when it comes to our budget," the governor said. "Montanans are best served when we work together, regardless of political party, on a budget that is not only balanced, but also funds essential services Montanans expect. And Montanans understand the importance of leaving money in the bank for unexpected things that might come our way. It’s not just good policy, it’s the fiscally responsible thing to do."

The rainy day fund helped the state stay solvent in 2017 when wildfire suppression costs strained the budget. Still, Bullock had to call a special session of the Legislature to revise the budget, causing a number of social service programs to suffer significant cuts.

But the state’s economy is growing, outperforming that of other states. Over the past five years, Montana's gross domestic product has increased by 8 percent, or $3.1 billion, Bullock said.

So tax revenue was better than expected – about $2.4 billion in 2018 – and the budgets for many programs were restored this year.

Anticipating continued revenue growth to almost $2.9 billion by 2021, the governor is proposing an annual budget of $2.5 billion to $2.6 billion, which would leave about $300 million in reserve by the end of the biennium.

Bullock wants the 2019 Legislature to put special emphasis on education, infrastructure and health care when it meets in January.

After last week’s defeat of Initiative 185 – which would have used tobacco tax money to fund the expanded Medicaid program – Bullock knows the funding for expanded Medicaid could see some hot debate in the Legislature. It barely passed in 2015 with limited bipartisan support and will sunset in 2019 without an effort to renew it.

Last week, Idaho, Utah and Nevada voters passed Medicaid expansion in their states.

Bullock said more than 90,000 Montanans and rural Montana counties can’t afford to lose that coverage, so he wants the state to provide a full match to the federal money. If Montana loses expanded Medicaid, it’s possible that county hospitals will lose the financial pad that keeps them afloat. In states without expanded Medicaid, rural hospitals have closed at a rate six times higher than in states with the program, Bullock said.

“Let’s be realistic – if we don’t keep Medicaid expanded, if we’re the only state that rolls it back, it’s not like we’ll all get big checks back from the federal government. Those tax dollars will go to buy health care for people in other states like New Jersey. We need to keep those investments here,” Bullock said.

In his budget, Bullock proposed a $290 million investment in infrastructure, including more than $148 million for community projects dealing with drinking water, wastewater and sewer systems, solid waste disposal and bridges. Bullock said that not only supports local jobs and economies but also rebuilds the state’s foundation for the future.

Finally, Bullock emphasized education, especially preschool education. To get Montana’s children off on the right foot, he proposed that $30 million go toward Head Start and public preschool programs.

He also wants to maintain the freeze on college tuition in the university system and invest in financial aid for students seeking two- and four-year degrees, regardless of age. Many students are adults returning for retraining after losing jobs in other industries.

Bullock would increase the two-year budget for higher education by $42 million.

“I fundamentally believe that public education is one of our great equalizers. I believe it gives every Montana student the opportunity to succeed,” Bullock said.

In addition, Bullock emphasized continued funding of aquatic invasive species program, cybersecurity and forest management to provide jobs and reduce wildfire risk.

“But let me be clear – I won’t accept a budget that puts Montana’s fiscal health in jeopardy,” Bullock said. “Montanans all across our state expect their elected officials to come to Helena to come together in a government that works for them and not against them.”