Lawmakers Move Closer to Budget Deal with Governor

HELENA — Gov. Steve Bullock and the Montana Legislature reached a deal late Tuesday on the biggest remaining pieces of the state budget, setting the stage for lawmakers to adjourn Wednesday.

Bullock and Republican legislative leaders spent much of Tuesday swapping deals before reaching agreement on the state’s budget deal. The House was preparing a late night vote on a bill that will add the last-minute items to the state’s spending plan.

The chamber plans to meet early Wednesday for a final vote, followed by the Senate.

Bullock told lawmakers earlier in the day that he only needed relatively small changes made to the main budget measure, House Bill 2. His changes totaled about $30 million out of the two-year, $10 billion spending plan. Both sides worked late to hammer out a deal where the governor was allowed to make changes worth about half his request.

The money was assigned broadly to the departments of corrections, health, commerce and administration, lawmakers involved in negotiations said. Bullock was given authority to divvy it up among the priority areas, but the money is considered one-time only funding that will not be considered part of the base in the next budget cycle.

Bullock told lawmakers that more money was needed to shore up priorities in child protective service, prisons and pre-release centers, and other issues. The governor also asked for more money to help an overloaded public defender’s system.

House Speaker Mark Blasdel said early estimates show the budget deal being negotiated would leave a projected surplus of about $200 million at the end of the two-year budget period. He estimated the package of bills would bring the budget close to the structural balance, where the state only spends about as much money each year as is taken in, sought by both sides.

Republican lawmakers also massaged their main tax cut measures Tuesday in hopes of getting Bullock’s signature.

Senate Bill 96 would exempt up to $100,000 in a company’s business equipment from taxation, and cut in half the 3 percent rate for business equipment worth between $100,000 and $6 million. The rate would remain 3 percent above that ceiling. Both sides campaigned heavily on some sort of reduction in the tax.

Senate Bill 282, also from Republican state Sen. Bruce Tutvedt of Kalispell, aims to simplify Montana income tax by eliminating some credits for corporations and individuals, and reducing the number of different rates charged. Supporters said the bill offers a tax break for some.

Both tax measures were endorsed Tuesday in the House and the Senate, although the tax simplification measure barely cleared the Senate amid opposition from both sides of the aisle from critics who argued it really does nothing to lower taxes.

“This isn’t a tax cut, this is a tax shift,” said Senate Majority Leader Art Wittich. “I was hoping for some tax relief in this session.

“It’s extremely disappointing that we had no tax relief this session. This is not tax relief.”

GOP legislative leaders were also preparing to send the governor a plan to fix the state pension system by asking employees and employers to pay more; give pay raises to state employees who have been working under a multi-year pay freeze; and provide money for a slate of educational and other building projects around the state.

The package did not include Bullock’s priority plan to expand health insurance to the working poor with federal money allotted under the federal health care law. The governor tried to pressure lawmakers to advance the measure — which was close to receiving majority support in both chambers — despite strong opposition from conservative Republican leaders. The governor has threatened he could call a special session to deal with the topic.