Following the close of the 89-day session of the Montana Legislature in late April, triggers were implemented to cut the budget. The Legislature passed through the bill and the Budget Stabilization Act set out a planned pathway of budget reductions if revenues failed to meet expectations. All four triggers were pulled but revenues continue to fall short to meet the state’s balanced budget including an ending fund surplus. At that point, statute required the governor to order all departments to contemplate a 10 percent reduction in their respective departments. Some services are protected by statute. For example, the judiciary, and sections of K-12 education including state funding per student cannot be part of the reduction plan. Following that procedure, hearings were held in the Interim Finance Committee. The proposed 10 percent cuts followed the cuts already imposed by the triggers from the bill. Most attendees objected to the scope and selection of services being cut within the 10 percent reduction. Especially hit hard is the Department of Health and Human Services (DPHHS) which provides programs including Child Protective Services, senior care and mental health counseling, to mention but a few.
Why are revenues down? The most obvious reason includes lagging collections of personal and corporate income taxes, a continuing lull in energy commodity receipts, a weakened agriculture sector, and the fire season. Our current revenue malaise may also suggest that elements of our sources for revenue are antiquated requiring fundamental changes to better take advantage of our economy. But this is a subject for the next Legislature to tackle. For now, the question beckons, “Are additional revenues needed to address the shortfalls and proposed reduction in services?”
As you can imagine, there is not consensus to the solution to the revenue shortfall. Some have suggested that the state take “the tightening of the belt method,” cutting bureaucracy that would leave the most vulnerable immune from loss of services. This sector of the Legislature is convinced that there is waste and some within this sector have accused the Bullock administration of purposely proposing cuts to essential services to raise taxes. They conclude that cutting a high volume of unnecessary bureaucracy is being ignored.
Another sector of legislators believe that it is simply impossible to make such extensive cuts without harm (impacts upon services to the vulnerable population). This sector looks to a combination of “belt tightening” and new revenue to lessen the cuts. One method of building consensus within this sector might include an injection of $75-$85 million into the depleted fire fund. Such an act would have a positive effect on other programs including those within DPHHS. I would consider myself a member of this sector of legislators. I have seen no evidence that the selection of cuts is a ploy to raise taxes. I believe there is a degree of waste and bureaucracy, but discovery of such admonishments will not alone solve the shortfalls.
If a critical mass of senators and representatives are comfortable with the combination of cutting and new revenues, there will be rationale for the calling of a special legislative session to mitigate the shortfall. It is the role of the executive session and majority and minority to leadership to communicate and determine if there is support for a session. This process is occurring. I think we will meet. The next revenue estimate occurs soon and this should provide more certainty as to future collections. Even if collection improves, we are deep in the hole, people will suffer and that fact justifies a special session.
Democrat Dave Fern is a Montana House representative from Whitefish.