Governor Presents Montana Budget Amid Economic Insecurity

By Beacon Staff

HELENA – Gov. Brian Schweitzer says he wants to increase reserves and limit budget increases amid a faltering national economy and a projected downturn in tax revenue.

Schweitzer released his proposed two-year budget on Saturday and said it would reduce overall spending a small amount from the previous budget, due to cuts in one-time expenses. Funding of ongoing programs would increase at about 4 percent a year.

Schweitzer said his budget does not call for tax increases. Nor are there tax cuts or rebates.

“It’s an austere budget,” he said. “I know there will be constituent groups that say, ‘What about me?’ But we have battened down the hatches. Simply stated, there is a tsunami in this international credit crisis. It has not affected Montana’s economy that much, but the assumption is that we can’t continue to be an island forever.”

Republican Senate President Bob Story said he thinks the budget still probably spends a little too much. Story said he hopes to work with the governor on cutting back ongoing programs.

The budget sets aside about $20 million to pay for the children’s health insurance initiative that voters have approved. In addition, the budget increases spending on education, although there is no guarantee this time around that state college tuition won’t go up.

Most importantly, Schweitzer said he is setting aside $250 million to keep in the bank in case the economy worsens. He implied a willingness to veto any attempts by lawmakers to spend those reserves.

“We got the money in the bank, and we are going to keep it there,” Schweitzer said. “The taxpayers have this as a savings account, it is your money in your bank. I am proposing to not let the Legislature touch it.”

Schweitzer said that he would use the money for tax cuts or rebates if the $250 million is not needed to deal with economic downturn over the next two years.

Other proposals include a plan to invest in making state buildings more energy efficient, to save money on utility bills.

Story said the annual increases proposed in ongoing spending would raise such spending by about 10 percent over the two-year period. He said it would be better to keep spending flat in tight economic times, especially in light of recent projections showing that state tax revenue will go down over the next two years.

“I am not certain that any of the taxpayers in Montana are going to see 10 percent increases in their income over the next two years,” Story said. “We may have to work with the governor and maybe even tighten this up some more.”

The Legislature will review the full budget proposal starting in January and will submit its spending plan to the governor later in the spring.

Schweitzer said his budget proposal already is conservative.

“We have to live within our means,” he said. “Every family in Montana is living within their means. The legislators ought to do the same here.”