HELENA – Gov. Steve Bullock’s budget director Wednesday said key lawmakers have agreed to a “general framework” to fill the state’s $227 million budget hole, including temporary tax increases – and laid out options that could be approved during a special legislative session.
But Dan Villa told reporters that an agreement is needed within days, or the governor will be forced to balance the budget only with spending cuts.
“We’re hopeful we can get there in the next several days, because we really are running out of time to do something other than the full $227 million in reductions,” he said.
Villa says at the end of this month, the state must make a $120 million payment to public schools, and that action is needed to create enough cash to make the payment.
That means the special legislative session would have to be called by the governor within the next few days and scheduled this month, he said.
The “framework” calls for covering the shortfall with a combination of spending cuts, temporary tax increases and budget transfers – about $75 million from each category, Villa said.
Bullock has the power to make the spending cuts on his own, but the other steps require legislative approval.
Villa distributed a list of possible tax increases and one-time budget transfers or charges Wednesday, totaling almost $400 million.
The list includes:
- Temporary tax hikes on lodging, rental cars, beer, wine, liquor and tobacco.
- A charge on the state workers’ compensation fund “management rate.”
- Higher vehicle registration fees.
- Increasing the number of suburban properties that pay a special fee for fire protection.
- A $10.5 million, one-time transfer from the state employees’ health plan, which is in the black.
- A $12 million, one-time charge gained by speeding up payments made by agency liquor stores.
- An $8 million transfer from a highway funding account.
“What we have proceeded to do throughout these negotiations is create menus for the respective (legislative) leaders to take back to their caucuses, get input, get feedback, with the hopes of getting to some form of agreement,” Villa said.
Wednesday marked the first time the Bullock administration has publicly revealed detailed options being considered to balance the budget.
Two months ago, the governor’s office announced the state’s current two-year budget would have to be cut by as much as 10 percent, because tax revenue wasn’t meeting targets and state firefighting costs had exceeded available funds by more than $40 million.
But Bullock, a Democrat, also said he didn’t want to make cuts that deep, and called on the Republican-controlled Legislature to mitigate the cuts by agreeing to raise taxes and approve some type of budget transfers.
Negotiations over what actions could pass a special session have been ongoing for weeks, among the governor, his administration and a handful of key lawmakers.
Republican leaders told MTN News this week that Bullock needs to identify what cuts he’ll make and what other steps he’s proposing.
Villa said Wednesday that Bullock has agreed to cut $75 million from the budget, but that he won’t identify the specific cuts until the Legislature acts on taxes and transfers.
“We are at $75 million in cuts and the governor has committed to Republican leadership tat we will get to that number,” he said. “How those particular cuts are allocated – we have not gotten there yet.”
Villa also said that GOP leaders have made it clear that they would support temporary tax increases only to cover firefighting costs, which are just under $75 million.