Lawmakers Urge Cuts That Have Least Effect on Services

Lawmakers heard several hours of testimony from residents who would be affected by proposed Medicaid cuts

By AMY BETH HANSON, Associated Press
Montana State Capitol in Helena on Oct. 25, 2014. Greg Lindstrom | Flathead Beacon

HELENA — As Montana faces a potential $227 million budget deficit, a legislative committee is asking Montana’s governor to make budget cuts that have the least effect on services to vulnerable citizens.

The Legislative Finance Committee met Wednesday and Thursday to review proposed cuts the state budget director says are needed to offset reduced revenues and this summer’s fire costs. Gov. Steve Bullock has the authority to cut up to 10 percent of the state general fund budget.

Lawmakers heard several hours of testimony from residents who would be affected by proposed Medicaid cuts. They and others said some of the proposed cuts would lead to higher costs in the long run. Many who testified urged lawmakers to meet in a special session to create new revenue.

“I don’t think that the majority of folks anywhere in this committee or across this state believe this full 10 percent cut as presented is realistic,” Republican Sen. Llew Jones of Conrad said.

The state may have to look at other temporary revenue sources, he said. The committee also discussed the possibility of leaving a smaller budget reserve and whether the general fund could take short-term loans from other state funds.

The committee approved a letter Thursday asking the governor to implement cuts that impose the least possible effect on services to vulnerable citizens, local property taxes and the safety and security of residents. They also asked that he follow laws passed by the Legislature, especially with regard to Corrections spending, that were expected to save the state money.

“There’s a lot of examples where I think we’re being penny wise and pound foolish in our thought,” Democratic Rep. Kelly McCarthy of Billings said Thursday.

The committee also noted that the current revenue estimates are uncertain and could change.

“Today the Legislative Finance Committee recognized the proposed cuts would hurt Montanans but they failed to offer any realistic solutions,” Bullock said in a statement after the meeting adjourned. “It’s time for the Legislature to come to the table and find a better path.”

Democratic Sen. Jon Sesso of Butte earlier said the cuts, as proposed, are not the only solution. “It’s going to take the (governor) to start the process and the Legislature to provide support in the coming weeks to get to a holistic solution to the challenge that we face,” Sesso said.

The committee also discussed its work plan between now and the 2019 legislative session.

Amy Carlson, director of the Legislative Fiscal Division, suggested the committee prioritize a study of the viability of the state’s tax structure in light of the changing economy, which has seen a decline in oil and natural gas taxes and volatility in personal income taxes. The review will include the possibility of expanding the sales tax on lodging and rental cars to include other goods desired by tourists as well as reviewing the state’s corporate tax structure.

Republicans on the committee countered that the state should also consider the plight of people that could face tax increases.

“This can’t be the end of the process,” said Republican Rep. Nancy Ballance of Hamilton, who is chair of the committee. “We need to understand how (the economy is) changing and make determinations how to go forward in this new economy.”

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