Montana Doesn’t Need to Make Across-the-board Budget Cuts

Montana's current two-year budget included a $360 million surplus

By Associated Press

HELENA – Montana does not need to make across-the-board budget cuts in response to the economic damage of the coronavirus, Gov. Steve Bullock said Wednesday, as other states are looking at making difficult reductions in education spending, healthcare and other basic services.

“Our state finances were in a historically strong position heading into this pandemic and because of that we also believe we’ll come out of this in a stronger financial position than most states,” Bullock said.

Montana’s current two-year budget included a $360 million surplus, putting the state in a position to better deal with the business shutdowns that were ordered to prevent the spread of the coronavirus and the resulting economic downturn, Bullock said. It also allows Montana to take more time to evaluate the effects of COVID-19 on state revenues while continuing to offer services that Montanans rely on, he said.

The governor’s budget office is forecasting a $113 million budget surplus in June 2021, not including $92 million in a budget stabilization fund that he could access before the state would have to make cuts.

“I recognize that a lot can change in the months ahead. But I’m buoyed by the fact that unemployment insurance claims are already down 20,000 per week from where they were at our highest point, which was about a month ago,” Bullock said.

House Speaker Greg Hertz, R-Polson, pointed to a Moody’s financial service company’s report that said Montana could see a 15% revenue hit in fiscal year 2021, which starts in July, and said it would be wise to start making some cuts based on a continued decline in tourism and difficulties for agricultural producers.

“The sooner we react, the easier it’s going to be in adjusting our budget,’ Hertz said. ”We want to be proactive. The governor doesn’t seem to be concerned at this point in time.”

Bullock and his budget director Tom Livers said the Moody’s report was based on revenue expectations and the belief that state economies were going to be completely shut down for a couple of months. He said it didn’t take into account the earlier reopening, spending that could be reimbursed by the federal coronavirus relief funding and increased federal matching funds for Medicaid recipients.

Bullock said he was “optimistic that we are responsibly opening up our economy at a rate faster than most states while still being protective of public health.” He noted Congress also has proposals to provide budget relief for states.

“Is that what we’re going to bet on, the federal government bailing us out?” Hertz asked. “I’m disappointed.”

Still, state revenues are starting to decline, Bullock said, and agencies are taking some steps to save money, including holding some jobs open. But for now, he’s rejecting more serious cuts.

The notion of making cuts based on what happen in six months or a year from now is “probably misplaced for a number of reasons, one of which is adding to the unemployment rolls doesn’t make a heck of a lot of sense, or cutting services that Montanans rely upon doesn’t make a heck of a lot of sense right now, either,” Bullock said.

Other states are forecasting devastating cuts, with many expecting revenue to decline by 15% to 20%. In Oregon, Gov. Kate Brown is preparing to cut 17% of her budget and is asking agencies for recommendations. Washington’s governor called for 15% cuts to many parts of his state’s budget through June 2021. Legislative staff in Colorado are projecting the state needs to make $3.3 billion in budget cuts, nearly a quarter of the state’s general fund.

Montana’s health department has announced three new COVID-19 cases in testing completed Monday and Tuesday, bringing the state’s total number of confirmed cases to 462. Montana has 16 known active cases. Three people are hospitalized and 16 people have died because of complications from COVID-19.

For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia, and death.

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