Bullock Tells Montana Lawmakers to be Fair in Budget Cuts

Bullock delivered a 45-minute State of the State address, his third, to a combative Republican-led Legislature

By Dillon Tabish
Gov. Steve Bullock speaks in the Montana State Capitol. Beacon File Photo

HELENA — Montana Gov. Steve Bullock on Tuesday appealed to lawmakers’ sense of fairness as they work to balance the state budget, urging them to spare programs that protect vulnerable residents and pressing them to raise taxes on the wealthy.

Bullock delivered a 45-minute State of the State address, his third, to a combative Republican-led Legislature during a shaky economic time for the state because of energy production declines and a corresponding drop in state government revenue.

“Guided by the values that have propelled us through time, we can take on the difficult decisions in our budget, build on our strong economy, take care of our neighbors and invest in our children,” he told lawmakers assembled in the House chamber.

In response, Republican leaders accused Bullock of leading the state into both a budget crisis and a management crisis, but they said they would work with the governor on a solution.

Bullock asked legislators considering cuts to government spending to continue to fund mental health services and programs to protect abused and neglected children as well as the elderly.

The governor also pushed legislators to pass a tax increase for people who earn more than $500,000 a year, saying it is unfair that someone making $9 an hour pays the same tax rate as a person who makes $250 an hour. He called his other tax proposals for medical marijuana, tobacco and wine modest.

“I ask that you give them fair consideration and then pass them,” Bullock said.

He promoted initiatives such as a $292 million public works package, early childhood education and worker training programs, and he invoked the words of past governors to underline his points. Bullock told lawmakers not to send him bills that would transfer public lands and warned that climate change and consumer demand is changing energy production in the state.

Democratic lawmakers stood and cheered the governor’s proposals as Republicans sat motionless.

Fixing the state’s budget shortfall has already become a sharply partisan issue between Bullock and the Republican legislators who hold majorities in both the House and the Senate.

GOP legislative leaders are resisting Bullock’s plan to raise taxes, say that money is too tight for many of the governor’s new initiatives and see their priority as reining in spending. House Speaker Austin Knudsen, R-Culbertson, said the governor could have taken measures this summer to ease the budget crunch but campaigned for re-election instead.

Republican legislative leaders will fix the state’s finances, he said, adding that he hopes Bullock will uphold his pledge to work with them.

“As we work toward solutions, we have to remember that state government must live within its means,” Knudsen said. “Republicans will return our state’s savings account to a safe level, and we won’t do it on the backs of Montana’s taxpayers and small business owners.”

A decline in oil, natural gas and coal production led to a nearly 20 percent drop in worker wages in the state’s energy sector in 2016, and it had the effect of slowing wage growth in other industries, according to an economic report released Tuesday by the University of Montana’s Bureau of Business and Economic Research.

Montana depends heavily on income tax to pay for state government operations, but income tax collections were flat last year as a result of the stagnant wages. In addition, oil and natural gas production taxes dropped $34 million, and corporation income taxes fell $54 million.

That left the state in a situation where it was collecting less money than it was spending on government operations, and officials relied on Montana’s cash reserves to make up the difference.

State economic forecasts show revenues and spending evening out again by 2019. But that still forces governor and Legislature to come up with a two-year spending plan now that gets the state to that point with a balanced budget and replenished cash reserves.

Those budget negotiations are expected to take most of the 90-day legislative session.