At the beginning of Montana’s 2017 Legislature, Governor Bullock laid out the case for a sound state budget. He explained clearly that due to declining energy and commodity prices state revenues would be lower than expected. This is not due to Montana’s economy, humming along at 3.9% unemployment, but rather national trends as we can see from our neighbors in North Dakota and Wyoming having the same revenue decreases from the energy industry.
Even though the rainy day fund worked how it was supposed to, in spite of Republican attempts to deplete the fund year after year, cuts were going to be made to the budget and modest revenue increases were needed. Bullock’s proposed state budget kept Montana in the black and rebuilt the rainy-day fund back to $300 million. This was done through a series of responsible targeted cuts to agencies, an increase in the cigarette tax, a modest 1% increase on income taxes for folks making over $500,000 a year, and increasing the Capital Gains tax. Basically, repealing the Martz Administration tax cuts.
However, the GOP-led Legislature chose to bury their heads in the sand and avoid revenue generating realities. They chose to make up a dubious revenue estimate that projected $100 million more in state revenue that did not add up to Montana’s budget experts. Republicans chose to reject the proposal to raise the cigarette tax just $1.50, the first increase in 12 years. This was influenced by heavy lobbying from Big Tobacco and against the overwhelming support of Montanans in favor of the cigarette pack tax. Republicans also stood by their wealthy donors and corporate interests to defeat a proposal for a mere 1% tax increase on millionaires and for ending unfair tax breaks to corporations.
The Republicans refused to look at where the budget could be cut meaningfully to not disrupt state services. They chose instead to pass a state budget with a blanket reduction bill known as Senate Bill 261. This bill triggered cuts across the board to state services including a reduction to Medicaid Provider payments. Republicans believed that a 1% mandatory reduction in provider payments could be weathered but they did not account for the reduction in federal matching funds that comes with it, leaving DPHHS to cut Medicaid Provider reimbursements by a total of 3.47%. This was their solution at the end of Session or it was going to be a government shutdown, the GOP’s other favorite tactic.
Much of this back and forth between Democrats and Republicans were highlighted in Lee Newspaper’s piece about text messages from the Governor’s Office to Legislators. Democrats and the Governor were constantly trying to get the Republicans to the table and meet about making the hard decisions on the budget. However, Speaker Knudsen was hardly available to meet, preferring to spend the second to last day of the session out of cell service.
Now the state is now faced with cutting 10% across all agencies because the executive branch cannot increase revenue without legislative approval, they can only make cuts. Painful, unnecessary cuts that could have been avoided if Republicans had come to the table in good faith.
Luckily Governor Schweitzer and Governor Bullock have kept a steady hand on Montana’s fiscal ship. Bullock will do what is necessary to keep essential services operating. But the fact is that this negative revenue trend has been here for a while. Even while Montana is experiencing some of the highest wage growth in the nation and record low unemployment levels, revenue has been falling short ever since the Martz era and was only sustainable lately because of the Bakken Boom. Good thing that rainy-day fund was left intact.
We must demand the Legislature reform Montana’s tax code. We cannot keep relying on boom and bust industries and we can’t keep giving handouts to millionaires and corporations. Montanans must demand millionaires pay their fair share to fund essential state services. Montana must finally end the failed trickle-down economics of the Martz Administration.