Busting Budgets, Not Broncs in Montana

By Beacon Staff

A point of contention at this legislative session is money. So what is new you may ask. The legislative sessions are always filled with arguments concerning the amount and direction of how to spend the public’s money. Any and every organization that is on the public dole tries to convince the majority of the legislators that their outfit is a prime candidate for the amount of money that they had secured from the last Legislature, plus an extra scoop on top. In good economic times these agencies deserve to be included in the bounty, the reasoning goes, and in the bad times, they need that extra money as the sole guardian of keeping the wolf from the door.

The present edition of the Montana Legislature has certainly not been exempt from the petitions of the crowd that gather in the hallways and hearing rooms of the Legislature extolling their virtues. It’s, literally, their job. These folks are needed, they reason, to do their part for a better society, something only government can do, and to question that, well that’s rude. Maybe we could continence that if the state treasury had Ben Bernanke and his printing press as a best friend. However, the man does not reside in Montana and has bigger fish to fry.

As the legislative session grinds on toward an end this coming spring a debate has developed in which the governor is campaigning for a bi-annual appropriation, which reaches beyond real expected revenues. To bridge the expected revenue amount and what the governor wants to spend could be solved in two areas, states the governor. The first is set-aside pots of money, which are originally destined for funding projects that extend beyond local governmental authorities’ abilities to completely fund. These would be projects such as water systems. The governor wants to raid these funds then repay them in the good times during the next Legislature. Just one point, he will be term-limited out and the next Legislature will be left holding that bag. The second revenue area the governor is fixated on is not there. At least not yet, or maybe never. Let me explain. The money that this present Legislature will be authorizing to be spent largely consists of future tax collections. Estimates. Taking nothing away from the professionals who try to present to the appropriation committees an accurate figure of what money is coming in, but they sometimes miss the mark. What figure to give, and live by, to the Legislature for them to appropriate, may leave the state, or rather the taxpayers, with a nice balance in two years, or with a terrible financial headache.

That is the income side that is supposedly, according to the administration, fairly in balance with expected outgoes, with a little help from some rainy day funds and a booming economy. However, there are two looming expenditures that seem to be in the “kick the can down the road” category. The first of these are the outstanding obligations to public service employee pension funds. Judged at approximately $3.3 billion for nine state pension systems and highlighted by TRS at $1.5 billion and PERS at $1 billion how are we as a state going to get out from underneath this oncoming avalanche? And then there are the looming costs of the new federal health care program. The cost to the state is principally found in the increased share of Medicaid that it will have to shoulder in a few years. This estimate may range around $80 million. Whether you like the new federal health program or not, the 28 states that are challenging the constitutionality of the law (of which our state attorney general is not getting involved in, but rather spending his time making commercials) fail then this is another burden on the states taxpayers.

To summarize, it is the position of the governor that the present Legislature authorize expenditures that exceed the expected revenue of even the most optimistic projections, with cost overruns being covered by funds that had been set-aside for other purposes. Spend it all and as for the future, it will take care of itself, when he is gone from the scene. And what of the promised pensions and the possibility of increased federal demands on the local health care system? The answer to that is … that’s what tax rates are for, to raise.

Jon Rush lives in Helena.

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