State Agencies Brace for ‘Worst-Case Scenario’ Budget Cuts

Revenue only grew by 0.2 percent in May, much lower than projections

By Bobby Caina Calvan, Associated Press
The Senate convenes during the Legislature in Helena. Beacon file photo

HELENA — State agencies are preparing for “worst-case scenario” budget cuts because of lower-than-expected revenues, triggering possible layoffs at the state library and other potential reductions in government services.

State revenues grew by two-tenths of a percent by the end of May — far short of the 4.3 percent the state’s Legislative Fiscal Division had anticipated. Continued shortfalls would trigger automatic budget cuts put in place by legislation Gov. Steve Bullock signed earlier this year as part of a budget stabilization deal reached between Democrats and Republicans.

The governor’s budget director, Dan Villa, said it’s likely that some level of cuts will have to be made, but it was too soon to tell how deep those cuts will be.

“We have directed agencies to be prepared for any revenue eventuality, from best case to worst case,” Villa said.

The state budget includes a series of revenue triggers that would activate mandatory cuts across state government, including cuts to specific programs if state revenue falls below forecasts. In case of a shortfall, Bullock would be authorized to dip into a firefighting fund to cover as much as $30 million in state spending. The budget includes four different tiers of cuts, with the worst-case scenario — a $33 million revenue shortfall — would eliminate raises for state employees and for direct care workers for the elderly and disabled, as well as cut some aid to public schools.

During the recently completed legislative session, Democrats and Republicans tangled over spending and revenues — with Republicans mostly prevailing in curtailing spending as Democrats sought to push through a package of “revenue enhancers” to offset projected shortfalls in revenue to stave off cuts in service.

“It sounds bleak. It was our worst fear, after this last session,” said Democratic Rep. Jenny Eck, the House minority leader. “For some these are just numbers. But they’re not. There are real-life implications.”

Some of the budget cuts could be substantial, including a projected 16 percent reduction in the state library’s $6 million budget. State Librarian Jennie Stapp said the cuts could mean the elimination of 12 of the libraries 44 staffers and the closure of a reading area.

Stapp said she was told by Villa in a meeting last month to plan for cuts and she acted accordingly. The plan was to be submitted on Tuesday to the Montana State Library Commission for review.

Senate Majority Leader Fred Thomas, a Republican from Stevensville, said the Legislature adopted a prudent budget.

“We weren’t interested in raising taxes,” said Thompson, who said the governor’s office should have done more to cut spending last year as revenues began to falter.

“You’re trying to predict revenue as accurately as possible, but the fact is it’s still a prediction,” Thompson said. “Things haven’t panned out, and reductions are going to have to take place.”