HELENA — Montana lawmakers have spent most of this year’s legislative session trying to close a shortfall in the state budget, and now they are devoting the session’s end to making sure they won’t have to do it again.
The Senate approved a bill Wednesday that creates a rainy day account called the budget stabilization reserve fund that could be used when money is short.
However, it will take time for the new account to accrue cash, so a panel of lawmakers from the House and Senate inserted into the bill a complex set of rules that would set up tiers of spending cuts if revenues slide over the next two years.
“Were we to be in a scenario where revenues come in low, these are the trigger cuts that would occur,” said the bill’s sponsor, Sen. Llew Jones, R-Conrad.
The House also endorsed the measure Wednesday, though a final vote must be taken in that chamber before the bill goes to Gov. Steve Bullock.
The Legislature earlier this session passed a $10.3 billion budget relying on a two-year revenue forecast prepared by legislative analysts. The budget bill, which is awaiting action by Bullock, cut spending and left many vacant positions open across state government as a result of an unexpected drop in revenue in energy and corporate income taxes and lower-than-expected revenue from individual income taxes
The new budget closes the shortfall and leaves just under $200 million in reserve, but it relies on a two-year revenue forecast prepared by legislative analysts. If that forecast misses the mark and revenues are lower than expected, the state would have less of a cushion than in years past to make up the difference.
To prevent that from happening, a conference committee added a series of “triggers” that would institute automatic cuts across state government and further cuts to specific agencies if the actual state revenue falls below the forecast. It also would allow the governor to use up to $30 million from a fund for fighting wildfires in the event of a shortfall.
For example, if revenue comes in $12 million below the forecast, the governor could use $12 million from the wildfire fund but a bill meant to increase the number of Medicaid slots for home and assisted-living care for Alzheimer’s disease and dementia patients would be void.
If revenue falls to $24 million below the forecast, there would be an across-the-board budget cut of .5 percent, with a few exceptions. The state also would take over administration of its Medicaid expansion program, which is now run by Blue Cross and Blue Shield of Montana.
Even lower revenues would trigger additional cuts to individual government agencies such as the governor’s office, the Legislature, the Montana State Library, the Montana Historical Society, the Department of Public Health and Human Services. Planned pay raises for state employees would be wiped out, proposed raises for direct care workers for the elderly and disabled would be delayed by a year and some public school base aid would be cut.
The bill had been worked on for the previous 10 days by lawmakers from both parties to come up with the formula.
“This has not been easy to determine where we go if revenues tank,” said Sen. Jon Sesso, D-Butte, said. “I think it’s the collective hope that they won’t be necessary at the end of the day.”
Rep. Jenny Eck, D-Helena, pointed out that state revenue would be higher if lawmakers in the Republican majority hadn’t quashed $100 million worth of tax increases they’d proposed for out-of-state corporations, the wealthy and in other areas.
However, the Republican-led Legislature has approved some tax increases, including the first hike to the state’s fuel tax in 24 years and fees on hydroelectric facilities and anglers to fight the spread of invasive aquatic species like zebra mussels.
The Legislature also plans to boost funding for road projects by imposing a new tax on luxury vehicles worth more than $150,000. However, lawmakers backed off an initial proposal to tax those cars and recreational vehicles up to 1 percent of their worth, and instead will add an $825 annual fee for 10 years on top of the regular motor vehicle registration fee.