State Fiscal Picture Darkens

The governor’s handling of state finances may have now put the state in deficit position

By Fred Thomas

When Gov. Steve Bullock took office he inherited a general fund balance of $537 million, now he has spent it down to an expected $100 million and the next legislative session faces a deficit where revenues will not exceed expenses!

It will take strong leadership to right the ship next session, both in the legislature and the governor’s office. Unfortunately, our current governor seems not to be invested in our base Montana industries that are all seeing a downturn.

Actual revenue for fiscal year 2016 dropped $141.5 million below projections.

At the end of the 2015 session and the beginning of fiscal year 2016 the state had $455 million in the bank and, at one point, we were projected to have more than $300 million left in the bank by the end of the current biennium. Projections have steadily been revised downward. Now, we could be looking at an ending fund balance of just $100 million. That’s a $200 million decline.

Yet, as he’s running for re-election, Bullock continues to try and paint a rosy picture of Montana’s economy and fiscal situation. He is still saying that Montana “has a $300 million rainy day fund.” With all due respect to the governor, we had a $300 million ending fund balance, but you spent it.

The governor’s handling of state finances may have now put the state in deficit position. The reality is that our natural resources industries are struggling and it’s causing problems in our state budget. Coal production in Montana is down by one-third this year. We just saw the closure of two major timber mills in Columbia Falls. The Bakken boom has faded. Hundreds of Montanans in these industries have lost their jobs. If President Barack Obama’s Clean Power Plan is fully implemented, Montana could lose more than 7,000 jobs and $145 million in revenue by 2025.

With Montana facing these headwinds, we need strong leadership that will stand up for Montana’s interests. Bullock has not taken strong action to defend natural resource jobs. He says he supports coal, but he has endorsed the anti-coal Hillary Clinton for president. As attorney general, he voted against the Otter Creek Coal Mine that would have created 4,400 jobs and provided Montana with millions in revenue.

On timber, the governor has yet to release the entire $5 million that the Legislature provided him in Hazardous Fuel Reduction Funds. He also waited more than two years to enter into a “Good Neighbor” Agreement with the federal government under the current farm bill. Both of these tools could be used to increase timber harvests.

Besides seeking to help the natural resource industries, the Legislature has attempted to leverage increased revenues and a large rainy day fund by passing legislation designed to help grow Montana’s economy. We passed three tax relief bills during the last session. These bills would have meant more money in your pocket to spend and stimulate the economy. Bullock vetoed those bills.

The Legislature, in the last two sessions, has passed much needed infrastructure bills that also met the governor’s veto. While he tries to cite “fiscal responsibility” as the reason for those vetoes, that hasn’t stopped state spending from increasing more than 20 percent during the governor’s term.

Bullock came into office with revenues on the rise, but has squandered opportunities to defend our natural resource industries and grow Montana’s economy. Now revenues are declining. It’s time for a new chief executive.

Sen. Fred Thomas, Republican

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