Montanans worry about tariffs, stock market, federal cuts
Jordan Hansen
(Daily Montanan) A week of new tariffs from President Donald Trump has shocked the markets and left at least some Montanans wondering about their investments.
And the Trump administration’s budget cuts have left some legislators wondering about the state’s budget bill, entering the final stages of discussion during the waning days of the 2025 Legislature.
The Dow Jones Industrial Average has dropped almost 4,200 points (about 10%) during the last month, while the Nasdaq Composite is down almost 2,200 points (12.3%) during the same period.
The Trump Administration’s stated goal with tariffs has been to boost American manufacturing, although economists have disagreed on the effects the tariffs would have.
A White House fact sheet explaining the tariffs stated, “increasing domestic manufacturing is critical to U.S. national security.” The administration has also said there is both a trade imbalance and tariffs that are “unfair” to America.
Senate Majority Leader Sen. Tom McGillvary said on Tuesday it was a little early to be making broad declarations about the tariffs’ effects. McGillvary was a financial advisor for Ameriprise Financial for 27 years and has seen volatility before.
“Things go up, things go down, markets react … I just don’t think you can make a call in one week,” said McGillvary, R-Billings.
He said the more notable issue is what federal cuts will do and how the state will have to react to that.
The Department of Public Health and Human Services could be impacted, which could in turn force the Legislature to react. About 90% of funding for Medicaid expansion is coming from the federal government.
It could involve a special session, said Senate President Matt Regier, R-Kalispell, but he said there’s no crystal ball to know the full effects to Montana.
“But I don’t think a special session should be a scary word at all,” Regier said.
Democrats have taken a different line, with House Minority Leader Katie Sullivan, D-Missoula, saying she was “very concerned” about economic instability and hits to state services.
It’s also something constituents are concerned about, she added, and federal cuts have also played a part in that fear.
“I have people just saying they’re very worried the economy is going to tank, and we’ll have a recession, and we will come back to the Montana Legislature and cut the heck out of all the human services,” Sullivan said.
Rapidly developing
Federal cuts were part of the discussion Tuesday in the Senate Finance and Claims Committee as senators held a hearing on the big budget bill, House Bill 2.
Sen. Janet Ellis, D-Helena, wanted to know what mechanisms the governor’s budget office might have in place should smaller agencies lose a significant amount of funding.
Federal dollars account for roughly half of the spending in HB 2.
Amy Sassano, deputy budget director from the governor’s budget office, said the Legislature would likely see a proposal in the next week or so about how it plans to respond. She declined to share details at the meeting.
However, Sassano said the interest from the governor’s budget office is to respond in “an enterprise-wide and thoughtful way,” and not react to changes one at a time.
“Our office doesn’t think that we can look at one agency in isolation,” Sassano said.
Sen. Emma Kerr-Carpenter, D-Billings, asked Sassano if the language in HB 2 addressing the possibility of a hit on revenues based on federal cuts was sensitive enough to the situation.
HB 2 includes a provision for additional Legislative Finance Committee meetings and other budget meetings should specific drops occur, such as legislation or an executive order that reduces anticipated federal revenue by more than $100 million.
Sassano said the language sounded reasonable. However, she also said secretaries of federal departments still have a lot of work to do, and at times, dollars that are believed to be frozen end up released.
Sassano also said that if Montana starts seeing “significant revenues being lost,” the state does not have the capacity to backfill every federal dollar lost.
Some state officials talked about cuts they fear are imminent, and at least one legislator talked about the difficulty of weighing important budget decisions in the midst of uncertainty.
Montana State Librarian Jennie Stapp said federal funding accounts for roughly 20% of the state library’s budget and slightly more than 20% of its budget for employees.
“We are very, very concerned about the status of the federal funds that we rely on,” Stapp said, pointing to cuts in other states.
Sen. Ellie Boldman, D-Missoula, said legislators were struggling to evaluate the budget in “real time” given potential changes from the federal government.
She pointed to a $10 million request for a new shooting range for law enforcement, as well as critical safety net programs in the Department of Public Health and Human Services, as expenses to be weighed.
Boldman said policy decisions that might have seemed responsible a few weeks ago might seem different now.
Rebecca DeCamara, with the health department, said the state is getting some “mixed messages” about block grants, used to fund a lot of the substance abuse programs and behavioral health programs that aren’t funded by Medicaid.
DeCamara said legal action has led to a halt on the cessation of some funds, although a final result “remains to be seen.” She also said the agency is making plans to ensure it can reimburse contracts that are already obligated.
“We’re really in a wait-and-see moment right now,” DeCamara said.
Charlie Brereton, director of the health department, said the only certain funding cuts his agency has been alerted to by the feds are Covid-related sources, and it aims to look for ways to replace them with excess appropriations in other areas.
“What we’re doing is trying to find opportunities to mitigate those funding cuts wherever possible,” Brereton said.