HELENA – Republican Greg Gianforte is challenging Gov. Steve Bullock’s claim that Montana is the most fiscally prudent state in the nation, with the Bozeman businessman saying the Democratic governor is citing outdated information.
Bullock says in one campaign ad, “It’s no accident that Montana is the most fiscally prudent state in the nation.” Earlier this week, Bullock repeated the claim during a debate with Gianforte.
“Don’t take my word. JP Morgan says we’re the most fiscally prudent state in the country,” he said.
The economy has emerged as a top campaign issue in this year’s close race for governor, with Gianforte trying to blunt Bullock’s rosy economic outlook by criticizing the state’s low worker wages.
Gianforte’s campaign said Bullock’s “fiscally prudent” statement is an attempt by the governor to take credit for an achievement that happened before his term began in 2013.
Bullock’s claim is based on a 2014 report by Michael Cembalest, JP Morgan’s market and investment strategy chairman. Cembalest’s report didn’t explicitly rank states by fiscal prudence but analyzed each state’s ability to pay its debts and pensions.
Specifically, Cembalest looked at what percentage of revenue each state pays toward its pension contributions, bond debt and retiree health care costs. The report used 2012 data adjusted to reflect a strong 2013 for public pension plan returns.
In that report, Montana fared the best among states for the least amount of revenue having to go toward those obligations. Bullock budget director Dan Villa told Lee Newspapers State Bureau in 2014 the report meant that Montana was the most fiscally prudent state.
Later that year, the reporting requirements for states changed, with new standards set by the Governmental Accounting Standards Board requiring states to provide additional data. In May, Cembalest updated his report using 2015 data reported under the new standards.
That report changed Montana’s position in the rankings. Instead of first among states, Montana ranked 26th.
Gianforte’s campaign circulated the updated report with a statement that said Bullock “can no longer use this benchmark to claim that Montana is ‘the most fiscally prudent state in the nation.'”
Villa said Friday the new requirements skew the results, and Montana’s finances have improved since Bullock took office. The standards penalize Montana more than other states, he said.
“The study dings us unnecessarily despite the fact that our finances have only gotten better and despite the fact that they were better than originally represented,” Villa said.
For example, Montana’s five-year pension investment rate of return is between 7.68 percent and 8.22 percent, depending on the plan, but the state must round that down to 6 percent under the new reporting standards, Villa said.
Aaron Flint, spokesman for Gianforte, said Bullock was now trying to discredit the update of the very report he had been touting on the campaign trail.
“Steve Bullock is the typical flip flopping career politician who was for JP Morgan before he was against them,” Flint said.
Cembalest did not respond to requests for comment. In his updated report, the state still fell well within the states that Cembalest determined are in good financial shape to meet its obligations.