Montana has a unique problem on its hands. It is flush with money, at least according to the governor’s office, which is touting a $453 million surplus for the fiscal year ending June 30. That’s the state’s second-largest surplus on record, just behind 2007’s mark.
Democratic Gov. Brian Schweitzer, with a knack for the theatrical, says this big ending balance is a big problem for Republicans and he eagerly reminds anyone who will listen that they predicted the state would be in dire financial shape unless the Legislature made cuts. Except the governor goes further than that: he calls them a bunch of “liars.”
To help make his point, Schweitzer displayed a Power Point presentation last week that included quotes from the 2011 session in which Republican lawmakers and representatives from the Legislative Fiscal Division predicted the state would run a budget deficit.
There is certainly a more effective, and understated, way to emphasize that Montana is in good financial shape (he reportedly referred to the Legislative Fiscal Division as “a clown show”). Schweitzer conveniently fails to mention the $3 billion shortfall in the state pension system, which still must be addressed by the Legislature and next governor. And a surplus of this size amid an economic downturn certainly begs the question as to how taxpayers will reap the rewards of this windfall.
And that’s a problem.
“I’m glad we have it but the biggest question is what to do with it,” Republican Chairman of the Senate Finance Committee Dave Lewis, a target of Schweitzer’s, told KTVQ.
Republicans, who control both chambers at the state Legislature, deserve some credit for the state’s cushion and I agree with their overall sentiment that it was best to be cautious. Our state Constitution, which requires lawmakers to produce a balanced budget, also encourages fiscal restraint.
But assuming the pension system is somehow fixed, Montana now has far too much of our money and should give us at least part of it back. And how that happens will be argued over in the months ahead.
Democratic gubernatorial candidate Steve Bullock has the most specific plan, pledging to give homeowners a one-time $400 property tax rebate if elected governor. That sounds like a good deal if you own property, but has earned critics on the left and the right.
In an op-ed by Ken Toole, the president of the Policy Institute who has held various elected positions within the Democratic Party, has called the plan flawed because it “leaves behind poor people, young people (students in particular), disabled people, and any other demographic group that tends not to own their home.” And he points out that the surplus was largely generated by incomes taxes, not property taxes.
Republicans, such as Bullock’s challenger Rick Hill, call the proposal a “one-time gimmick” and advocate permanent property tax relief paid for by increased revenues from energy resource development.
But attaching tax cuts to the unpredictability of the commodities market – look at natural gas, which received just one permit in 2012 as prices have tumbled – could leave the state staring at red ink and forced to choose between raising taxes or cutting services.
Others advocate using the money to shore up public services, such as the state’s education system, and point out that public employees’ salaries have been largely frozen the last few years. But in the current political climate, increasing the budget by any significant margin is perhaps the hardest sell of all.
Yes, it’s a good problem to have. But ignore the posturing over who gets credit for the surplus and instead demand a bipartisan plan that either lowers taxes, increases jobs, or both.