With Montana’s revenue failing to meet projections and triggering a worst-case budget-reduction scenario, statewide spending cuts to the tune of $97 million are expected to start as soon as this month.
Health programs and public schools across the state will absorb most of the blow, with the Office of Public Instruction set to cut $19 million over two years and the Department of Public Health and Human Services cutting at least $26 million, according to Gov. Steve Bullock’s budget office. Other state agencies are required to reduce their budgets by at least a half-percentage point.
The declining revenue predictions also triggered a transfer of $30 million from the state’s fire suppression fund to its general fund.
The cuts are the result of a series of triggers the 2017 state Legislature built into a companion bill to the budget. Senate Bill 261 includes four levels for automatic budget reductions, each triggered by falling revenue levels.
The Montana Legislature, led by Republican majorities, passed a state budget earlier this year, projecting $2.2 billion in revenue. Democrats fought the figure, saying it was too optimistic and that Republicans had inflated it to avoid raising taxes.
On July 26, the Legislative Fiscal Division released a new calculation for state revenues in 2017, coming in at $2.14 billion, about $74.5 million below predictions.
But what does that mean for Flathead County?
According to OPI, statewide reductions will hit $19 million. That breaks down into $6.3 million from the data-for-achievement payments; $5.8 million from school facilities payments; $5.6 million from combined fund block grants; and $1 million from new secondary vocational education.
In Flathead County, all 23 school districts face budget cuts totaling almost $590,000. According to the OPI estimates, Kalispell’s School District 5 would be hardest hit, facing the loss of nearly $137,000 for elementary schools and about $154,000 for high schools.
The Columbia Falls elementary district will lose $61,661, and the high school sits at $31,145. Whitefish’s schools will also see reductions, with about $37,400 from elementary school budgets and $15,580 from the high school. Bigfork’s elementary school budget will lose about $22,000, and the high school faces a $16,700 budget reduction.
Flathead County Superintendent of Schools Jack Eggensperger said the reductions will affect each district differently, depending on their existing reserves and student populations.
For example, Eggensperger had spent the morning at West Glacier Elementary, which faces losing about $1,600 due to the budget reductions. The school’s reserves will likely help cover that amount, he said, as is likely also the case with Kila Elementary and its nearly $5,200 loss in state funds.
The cuts will likely affect other districts, such as Evergreen Elementary, harder. That district is expected to lose more than $25,000; coupled with declining enrollment, it won’t be an easy fix.
“The number of students they’ve lost over the last few years, and taking this additional hit, that’s pretty significant for them,” Eggensperger said.
The county superintendent was also in the process of figuring out if the shortages could be part of a district’s levied funds.
The state health department is staring down the barrel of $26 million in cuts, with public hearings held last week over the proposed reductions. According to DPHHS, those cuts are expected to come from decreasing Medicaid provider payment rates in the Disability Services Division, the Senior and Long Term Care Division, and the Addictive and Mental Disorders Division.
There will also be increased vacancy savings, which means positions that aren’t filled will remain that way. Savings would also come from eliminating the third-party administrator for the HELP Act.
For fiscal year 2018, DPHHS looks to cut about $12 million, and about $14.5 million in fiscal year 2019.
Revenue and Budgeting
Bullock’s budget director Dan Villa said in an interview with the Beacon that he had warned lawmakers about their estimates.
“I was pretty direct with the legislators about how I thought their estimates were far too high,” Villa said.
Oil and coal prices and production have not performed as the Legislature predicted, he said, and the state has also seen a softening in income tax collections.
“Where we’re seeing it is not in the wage-earners — that’s up 4.4 percent” Villa said. “We have a lot of high-income earners sitting on the sidelines waiting to cash in any sort of capital gains in the event there is a tax cut from the federal government.”
But Sens. Bob Keenan, R-Bigfork, and Al Olszewski, R-Kalispell, say they are underwhelmed with how the budget reductions are shaping up. Both served on the Health and Human Services Subcommittee during the 2017 session, and said the intent behind SB 261 — the trigger bill — was to reduce bureaucracy, not services.
“DPHHS never fails to take care of themselves, but anytime a hiccup happens with the economy, they take it out on the people contracted to serve needy people,” Keenan said. “What they are ultimately doing — they’re not cutting their full-time employees, they’re not cutting their salaries — they’re hitting the services.”
Keenan said he could see where the budget negotiations were heading in the final days of the legislative session, and voted no on the budget and its companion bills.
“The intent of the Legislature for 2017, especially with (Senate Bill) 261, was to decrease government, not necessarily the services,” Olszewski said. “So if we are unable to meet our budget expectations, our expectations were that you could use vacancy savings to reduce infrastructure of bureaucracy.”
Olszewski said the “agencies are taking the cuts out on the people,” which will make residents angry.
“I feel that the cuts and how they’ve been made go against the intent of the Legislature and how we worked hard in the budget process, especially in health and human services,” he said. “The people who are getting cut first are our disabled, our elderly, our blind — people that really need the Medicaid services.”
Keenan, however, said both the governor’s office and the Legislature need to take responsibility for their decisions.
“For the governor’s office to all of a sudden point fingers at the Legislature is wrong, and the Legislature pointing fingers at the governor’s office is wrong,” Keenan said.
Estimates of Proposed Cuts to Schools in Flathead County
Information via Office of Public Instruction
Kalispell HS: $154,259.89
Kalispell Elem: $136,961.80
Columbia Falls Elem: $61,661.07
Whitefish Elem: $37,389.54
Columbia Falls HS: $31,145.46
Evergreen Elem: $25,064.68
Bigfork Elem: $22,010.75
West Valley Elem: $18,218.06
Bigfork HS: $16,718.47
Whitefish HS: $15,580.75
Somers Elem: $14,796.78
Helena Flats Elem: $10,020.59
Smith Valley Elem: $7,107.57
Cayuse Prairie Elem: $6,082.90
Fair-Mont-Egan Elem: $5,653.66
Creston Elem: $5,196.42
Kila Elem: $5,195.15
Swan River Elem: $4,450.16
Deer Park Elem: $3,959.26
Marion Elem: $3,334.97
Olney-Bissell Elem: $2,292.68
West Glacier Elem: $1,648.09
Pleasant Valley Elem: $106.28