Gianforte Details Tax Cuts, Lower Spending in New Budget

HELENA – Montana Gov. Greg Gianforte released his budget proposal Thursday, following through on his campaign promises to try to reduce taxes and hold the line on state spending.

The proposal decreases general fund spending by $100 million over the biennium compared to the budget proposed two months ago by former Democratic Gov. Steve Bullock.

Unlike Bullock’s proposal, Gianforte’s plan does not rely on a transfer from the state’s Budget Stabilization Fund, meant to be used in cases of unforeseen changes in the state’s economy.

The majority of the savings compared to his predecessor’s budget come from eliminating proposed increases in state spending, said Gianforte, a Republican, adding that he is not proposing cuts to essential services.

Republicans, who hold majorities in the state House and Senate, have indicated their priorities align with Gianforte’s plan, while Democrats in the Legislature have said they will fight any budget cuts that hamper the state’s economic recovery from the impacts of the pandemic.

Montana Democrats were reviewing the proposed budget and planned to issue a statement later Thursday.

The new plan reduces the state’s top marginal individual income tax rate from 6.9% to 6.75%. Gianforte said the proposed cut would impact half of Montana’s residents, and that he intends to introduce additional tax decreases in the future.

“Because we have the second-highest individual income tax rate in the Rocky Mountain West, too many businesses choose to take their operations and the associated jobs to Wyoming, Colorado, Utah and Arizona,” Gianforte said.

The plan also provides business equipment tax relief for smaller businesses and property tax relief for low-income homeowners.

While the budget would keep general fund increases at less than 1% per year, it includes targeted programs to address goals included in Gianforte’s campaign plan.

The proposal provides $2.5 million in incentives to local school boards for increasing starting teacher pay; $1 million per year in trades education and training by providing businesses a credit for employee education and training; and $23.5 million in state and federal funding for community substances prevention and treatment programs, including funds from the new marijuana tax revenue and the state’s tobacco tax settlement. The proposal would provide 14 new parole and probation officers to reduce recidivism, and provide substance abuse and mental health treatment in corrections facilities.

The proposal does not include any state funding to address the COVID-19 pandemic. Gianforte said his administration is awaiting guidance on federal pandemic funding recently passed by Congress.