HELENA – The Bullock administration Wednesday said it needs to cut the state budget by as much as $230 million, to put it back in balance, and asked state agencies to submit plans for 10 percent cuts by next week.
Dan Villa, the governor’s budget director, said the administration isn’t looking forward to making the cuts, but has little choice in the face of lagging tax revenue and ballooning costs from fighting forest fires.
The Legislature could stop the cuts by coming into special session to approve tax increases, but Villa said he doesn’t see the Republican majority of the Legislature doing that.
Rep. Nancy Ballance of Hamilton, the Republican chair of the House Appropriations Committee, agreed, and told MTN News that Gov. Steve Bullock is taking the right step in cutting the budget at this time.
“There still would be no appetite to (raise taxes), from the majority,” she said. “This is the perfect step for the governor to do.”
House Minority Leader Jenny Eck, D-Helena, told MTN News it’s “very frustrating” that majority Republicans won’t consider any tax increases on big corporations or wealthy individuals.
“We put forward several bills that would have the super-wealthy and out-of-state corporations pay their fair share,” she said. “Had those bills passed, we’d be in a better situation now. … We planned for the worst and hoped for the best, but unfortunately the worst has happened.”
Under state law, the governor can order state agencies to cut up to 10 percent of their budgets to avoid deficit spending. If cuts beyond that point are needed, the Legislature would have to convene in special session and decide how to balance the state’s two-year budget.
Villa said state agencies will submit their budget-cutting proposal by Sept. 8. After a review process by legislative fiscal staff and the Legislative Finance Committee next month, the governor would decide what level of cuts to make.
The governor’s request applies to all state agencies except the Legislature, the Judicial Branch, the Montana School for the Deaf and Blind in Great Falls and state funding for public schools.
Villa said he’ll be asking the Legislature, the judiciary and MSDB to comply voluntarily with the request for a 10 percent budget-cutting plan.
The cuts would come on top of nearly $70 million in cuts already imposed, which were specifically required by law when state revenue failed to meet certain targets on June 30.
The state’s current two-year budget, as approved by the 2017 Legislature, was $4.6 billion.
Villa said if the state is to maintain a $143 million balance at the end of the 2018-19 budget period, his office estimates that state spending must be cut by $227 million, given current revenue estimates.
That estimate includes an additional $40 million in firefighting costs, over the next two years.
The state firefighting fund started the two-year budget period of July 1 with about $30 million. As of Wednesday – two months into the budget period — the state has spent that entire amount and an additional $14.5 million, Villa said.
The state is dipping into other budgets to pay for firefighting now and estimating it will need another $20 million this year and $20 million next year.
Villa handed out sheets showing the level of 10 percent cuts for each government agency or program. Some of the biggest include $105 million for the Department of Public Health and Human Services, $44 million for the state university system, $40 million for the Department of Corrections and $10.5 million for Revenue Department.