Schweitzer Sticks With Large Reserves

By Beacon Staff

HELENA – Gov. Brian Schweitzer said he will stick with his plan for large reserves, even as his office prepares an amended budget to cut back his original spending proposal.

Earlier this week, legislative fiscal analysts said the revenue picture would decline at least another $50 million over the next two years. That’s on top of a $500 million reduction last month, that the governor factored into his first draft of the budget.

Schweitzer has until Monday to make adjustments to the two-year spending plan he submits to the Legislature, which meets early next year.

“We’re trimming and carving,” Schweitzer said.

But proposed reserves of $250 million are likely to be spared.

“I don’t know how tough this downturn is going to be. I do know we are better off than most any other state,” Schweitzer said.

Schweitzer said that means the biggest areas of government spending — education, corrections and public health — will likely have to be trimmed from his original proposal. Schweitzer said he doesn’t think that any of those core programs will face reductions from their spending levels over the past two years.

State law required the governor to submit a preliminary budget to the Legislative Fiscal Division by Nov. 15. He has until Monday to submit an amended budget to the legislative agency.

Earlier this week, fiscal analysts said a downward swing in oil prices and other factors related to the recession would have even a bigger effect on state revenue than they anticipated last month when they dropped almost $500 million from projections.

Republican leaders said they agree with the plan to set aside $250 million.

Senate President Bob Story said he expects the revenue picture could get worse, and the cushion will help make sure the state is prepared to deal with it. He said he hopes the governor’s office trims enough.

“I know they are concerned about it, and so are we,” Story said. “We will just have to see where they make their cuts, if they are serious cuts or just window dressing.”

Story said Republicans who have fought for tax cuts in the past understand they will be a tough sell in 2009.

Any effort to reduce property taxes would require the state to send money to local schools and governments to compensate them for the reduction. Story said that money would be hard to come up with.