Gov’s spending, tax proposals tee up another budget battle at 2019 Legislature

Posted at 4:56 PM, Dec 28, 2018
and last updated 2018-12-28 18:48:47-05

This is the second of a three-part series previewing the 2019 Montana Legislature

HELENA – Gov. Steve Bullock, preparing for his final Legislature, is pitching a familiar set of proposals in his two-year blueprint for state spending: state-funded preschool, money to finance a college-tuition freeze and other student aid, and an ambitious infrastructure plan.

But to make the books balance – including a $300 million year-end cushion – the Democratic governor also is also proposing nearly $160 million in new taxes for those two years.

Republicans who control the Legislature say those taxes aren’t going to fly, setting up what’s sure to be another epic battle over the final shape of the state’s two year, $10 billion budget.

“I don’t think Republicans are inclined to vote for any tax increases to grow government more,” says Senate President Scott Sales, R-Bozeman. “We’ve tried to live within our means on an ongoing basis, and I think that’s what we’re going to do again.”

MT Senate President Scott Sales, R-Bozeman

When Bullock is asked why he thinks Republicans are any more inclined to accept what they’ve rejected in previous sessions, Bullock told MTN News that Montanans expect lawmakers and the governor to work together – and that’s what he plans to do.

“The idea that we actually make sure our state government and the fees that we charge are keeping pace with the expectations Montanans have only makes sense,” he says. “So I sure hope that neither Democrats or Republicans start drawing lines in the sand in December.”

Bullock unveiled his proposed two-year budget in November. The 2019 Legislature convenes Jan. 7 and House-Senate joint budget panels controlled by Republicans will start examining the spending plan within the week.

Lawmakers must approve a budget by the time they leave Helena next April or May.

Highlights of the Bullock budget include:

• An overall 7 percent increase in spending over two years, to $10.3 billion of state and federal funds.
• A $290 million infrastructure plan, which includes local water-and-sewer projects, bridges, broadband infrastructure, state buildings and college structures. The plan also relies partly on state bonding, which requires approval by two-thirds of each house of the Legislature.

The governor also is proposing a $44 million grant program for communities impacted by oil, gas and coal development.
• Continuing Medicaid expansion, which provides health coverage to 100,000 low-income adults in Montana. The state’s share of the program is estimated at $60 million a year, although the Bullock administration says that amount is offset by some savings.
• About $30 million to fund preschool, through either public schools, Head Start programs or community-based providers.
• Increased state funding for the university system, both to freeze tuition and provide need-based aid to students.

The governor’s major tax-increase proposals are $102 million in tobacco taxes, including $1.50 per pack on cigarettes, $20 million in liquor excise and license taxes, $18 million in lodging taxes, $12 million in fees paid by investment advisers, and $5 million in rental-car taxes.

Senate Minority Leader Jon Sesso, D-Butte, says the infrastructure should be viewed as critical investment in the state’s future, that provides jobs and underpins long-range economic development.

Senate Minority Leader Jon Sesso, D-Butte

In the past several sessions, a core of conservative Republicans has rejected infrastructure proposals that borrow money. Bills that incur state debt need approval by two-thirds of each house.

“I’m hoping there is a more receptive environment here in the Legislature to invest in our future, rather than getting all caught up in `bonding is borrowing, and we’re borrowing against our kids’ future,’” he told MTN News. “No: what we’re doing is investing in our children’s and our grandchildren’s future.”

Sesso also says tax increases should be evaluated based on whether they’re fair and what they pay for.

“I’m sure there are a lot of tax bills (proposed) to reduce taxes,” he says. “Well, we can’t reduce taxes in areas where you think relief is warranted unless we’re taking advantage of taxes in areas where it’s common practice.”

Republican legislative leaders sound unconvinced, however, saying that state tax revenue appears relatively healthy and should be adequate to finance the state’s needs, without tax increases.

Sales says if more revenue may be needed, Republicans prefer to get it by helping the private economy grow, such as taking steps to encourage three large mining projects on the drawing board, near Libby and White Sulphur Springs.

“Maybe this session is just going to be like the three bears – this porridge is just right,” he says. “We’ve got enough revenue to continue what we’re doing, but we don’t have a lot to expand government, which myself and a lot of the more conservative Republicans are opposed to seeing.”

Tomorrow: The push to crack down on drug abuse and prescription-drug prices

2019 Legislature: Medicaid expansion is the high-profile issue