Montana Legislature: Can lawmakers, governor close $227M budget gap?

Senate Majority Leader Fred Thompson, R-Stevensville; Senate Minority Leader Jon Sesso, D-Butte; Democratic Gov. Steve Bullock; House Majority Leader Ron Ehli, R-Hamilton; and House Minority Leader Jenny Eck, D-Helena, will have to find compromise during the special session of the Montana Legislature.

Editor’s note: Veteran state political reporter Chuck Johnson is covering the special legislative session for the Missoula Current and Last Best News. He will be covering his 19th special session out of the 33 special sessions in Montana history. Johnson also covered 22 regular legislative sessions for several different news organizations: Lee Newspapers, the Great Falls Tribune and the Bozeman Daily Chronicle. Montana has had 65 regular legislative sessions.

HELENA — Montana legislators will convene for a special session next week to address proposals by Democratic Gov. Steve Bullock to fill a state government budget gap.

On Friday, Republican legislators, who control both the House and Senate, formally expanded the session to add some other ideas to the mix.

Earlier this week, Bullock issued a formal call to summon legislators back to Helena for a special session that starts Tuesday. Joint House and Senate committee hearings will meet Monday.

At issue is how to come up with money to fill a potential $227 million general fund budget gap.  State tax revenue collections have lagged behind what the Legislature projected earlier this year.

In addition, after the costliest wildfire-fighting season in state history, lawmakers have been asked to replenish the firefighting fund that was drained earlier this year.

Bullock’s staff had worked informally with key Democratic and Republican legislators from the House and Senate to come up with his plan.

It would divide the gap into thirds and fill it this way: $76.6 million in budget cuts, $75.5 million in fund transfers and $75.1 million in temporary tax increases.

The tax hikes include temporary increases in the state taxes on hotel, motel and campground lodging, rental cars and a 3 percent management fee on the Montana State Fund workers’ compensation accounts that top $1 billion.

“We’ve been working for months with Republican leaders to identify a path forward that doesn’t require these $227 million worth of cuts,” Dan Villa, the governor’s budget director, said Friday. “We’re pleased with the progress made to date. We know there’s more work to be done in the coming few days prior to the special session, but we’re confident that Republicans and Democrats both believe there’s a more responsible path forward.”

Republicans said Friday they had obtained the necessary 76 signatures out of the 150 legislators to expand the session’s agenda.  They included Bullock’s proposals but added some of their own.

One is a controversial proposal is to accept a $30 million payment from CoreCivic (formerly Corrections Corporation of America) in exchange for extending by 10 years the state’s contract for the Crossroads Correctional Center private prison in Shelby.

Republicans included the budget cuts that Bullock proposed, but which he can put into place without legislative approval under state law.  Bullock has said he would make the cuts after the special session.

House Speaker Austin Knudsen, R-Culbertson, said the three major Republican proposals call on the administration to accept the $30 million payment from the operators of the private prison in Shelby, authorize the state auditor to apply for a waiver for a high-risk insurance pool and direct some fire mitigation funds to employ private loggers to reduce fuels in forests.

“I will not be supporting any tax increases,” Knudsen said.  I’ve got to tell you, you get out of Helena and get over where I live, we’ve just had the worst drought in 100 years, terrible crops, terrible calf crop this year, ag prices are still down, calves have rebounded a little but not much.  It’s not a good time to talk about raising taxes. And of course, everyone just got their property tax bill.”

Senate President Scott Sales, R-Bozeman, said he believes accepting the $30 million from the private corrections company makes sense.

“I don’t know why we wouldn’t take that money versus raising taxes and cutting services on the most vulnerable Montanans,” Sales said.  “I think both the Senate and House will pass it.”

Sales questioned whether the Legislature would support the tax increases recommended by Bullock.

“I’m not feeling that there’s an appetite for tax increases,” he said. “I think we’re going to be able to solve most of these problems with some of the ideas we have in the expanded call.  If there is a tax increase, it will be very minimal and very temporary.”

Countered House Minority Leader Jenny Eck, D-Helena, “My perspective is we have been working for many, many weeks to try to come to a place of middle ground and understanding between the parties to try to come into the special session with as close of an agreement as we possibly could.”

Bullock’s call reflects the conversations over many weeks by the administration and Democratic and Republican legislative leaders with an understanding of what it will take to pass the bills. They are not necessarily the first options party caucuses would make.

“I don’t like that fact that we’re looking at looking at $75 million in cuts, after we’ve already made $196 million in cuts this year alone and $350 million since 2013,” Eck said.

As for the Shelby prison proposal, Eck said now is not the time to negotiate a multimillion-dollar contract “that benefits one particular part of the state.” She said there are contract issues that need to be studied carefully and not “rammed through” in a special session.

Senate Minority Leader Jon Sesso, D-Butte, said he felt good on Monday over Bullock’s special-session call, which reflected the bipartisan compromises that leaders had worked on for weeks. Then Republican expanded the session.

“I guess I’m still confident we’re operating in the four corners of what could be a good mix for the session, with government cuts, transfers and some new revenues,” Sesso said. Overall, I’m optimistic that we can find the right blend of moves that can get us to the 26, 51 and 1.”

That is a reference to the need for 26 votes in the 50-member Senate and 51 votes in the 100-member House to pass the bills and then getting Gov. Bullock to sign them into law.