When lawmakers return Monday after an Easter break, their top priority will be to bring the state budget into balance and decide how much tax relief to provide Montanans.
Any solution must win approval of the Democratic-led Senate and Republican-controlled House and, ultimately, Democratic Gov. Brian Schweitzer.
In simple terms, lawmakers must decide how much of the state's $1 billion-plus projected general fund surplus they want to:
Spend on increased state government budgets and new programs.
Set aside for savings through the ending fund balance or surplus, and perhaps create a rainy day fund to help tide the state through tough times if revenues should drop.
Return to taxpayers in the form of tax relief.
Coming out of the Senate Finance Committee, the general fund budget proposes spending $30 million to $40 million more than what Schweitzer requested last fall. And that's not including a variety of tax-reduction measures pending before the Senate and House.
Schweitzer said spending proposals by both Democrats and Republicans are “busting the budget right now.”
“Here's what I would say to the Legislature: ‘Choose your priorities. You decide how you're going to get this budget back to a balanced state,' ” Schweitzer said in an interview. “Otherwise, you will force me to choose the priorities. Now I am perfectly capable and willing to do that.
“But if the Legislature chooses their priorities before it gets to me, then the bills I sign will probably have more of their fingerprints on it and less of mine - the House and Senate, Republicans and Democrats.”
Schweitzer is insistent that the Legislature go along with his general fund spending cap of $1.8 billion in fiscal 2009.
“I just can't allow this Legislature to spend us into the poorhouse,” he said. “If you want to add something, you have to cut something.”
The budget action now moves to the floor of the Senate, which gets the state budget bills last because spending bills must originate in the House.
Senate President Mike Cooney, D-Helena, who sat on the Senate committee that revised the budget, called it “a good starting point as we send it to the floor.” He predicted the Senate would give the budget “some fine-tuning” and predicted “you will see, in fact, some trimming.”
However, Cooney said Senate Democrats have made a commitment to spend some of the additional state revenue on expanding the Children's Health Insurance Program and increasing K-12 and university system funding - “giving our kids a a great opportunity to get a world-class education.”
“I've said all along that we have an opportunity to invest in services that are important to Montana,” Cooney said. “Our priorities are to try to address the priorities and the needs of the people of Montana.”
As for tax relief, Cooney pointed out that the Senate in February sent Schweitzer's plan to the House, where it awaits action. The Schweitzer plan would provide a one-time, $400-per-household property tax rebate to Montanans who own their principal residence.
Asked about the Republican demand for permanent property tax relief, which would continue, Cooney said, “I think there's always room for discussion.”
But Cooney expressed concern about the ongoing or permanent property tax relief Republicans are pushing for.
“I think it would be very foolish to give Montanans something that we may not able to afford and may not be able to sustain,” Cooney said.
Senate Minority Leader Corey Stapleton, R-Billings, offered this solution for the $1 billion surplus:
Devoting one-third of it to permanent property tax relief.
Spending one-third of it on new government programs, as defined by Democrats, which control the Senate Finance and Claims Committee that increased the budget.
Saving one-third of it on such items as the ending fund balance, a budget rainy day fund (which he opposes) and deferred maintenance of buildings.
He called on Senate Democrats to pass and send to Schweitzer the Republican permanent property tax relief plan by April 16, which is the 80th of 90 legislative days. The details of the permanent property tax are “negotiable,” he said, but the total package should be in the range of $300 million.
“The House (Republicans) pretty much went crazy sending over tax relief, and the Senate Democrats did the same as far as approving new programs,” he said.
Stapleton said he doesn't believe Republicans will get everything they want since they control only the House, nor should Democrats expect everything they want because they have a majority only in the Senate.
“Everyone needs to chill out on the magnitude of their proposals,” he said.
For his part, Schweitzer said he laid out his priorities in the executive budget he recommended last fall.
“We have proposed historic tax cuts for homeowners and small businesses,” he said.
He was referring to the one-time, $400-per-household homeowner tax relief and the permanent business equipment property tax relief exempting the first $80,000 of market value from taxation.
Eighty percent of the state general fund budget is spent on K-12 and higher education, corrections and health and human services, the governor said. So if legislators are looking for places to trim the budget - which means reducing proposed increases, not cutting existing spending levels - that's where the money is, he said.
“There are proposed increases across the board, in some cases historic, and there are some people who say they are not enough,” Schweitzer said.
If lawmakers don't reduce the budget, the governor said he will.
“Somebody has to say enough,” he said.
Schweitzer urged lawmakers to “get out your pens, calculate your priorities and get this budget sustainable and balanced.”
“If the budget is not balanced and sustainable, I can't sign it,” Schweitzer added. “At the end of the day, I have a constitutional requirement to have a balanced budget.”
He sounded this warning to lawmakers from both parties to step up their efforts:
“We're running out of negotiating time.”
Questions and answers on the budget
HELENA - With three weeks to go at the 2007 Montana Legislature, it's time for lawmakers to get down to divvying up the state's $1 billion surplus.
More spending? Tax cuts? A little of both? Or a lot of one or the other?
There's more money to go around than ever before. But whatever lawmakers decide, a lot of proposals are going to get whacked.
In question-and-answer format, here's a closer look at the spending, the process and the options before the Legislature.
Qestion: How much money is in the latest version of the budget?
Answer: About $3.9 billion of “general fund” spending for the next two years. That's a 21 percent increase over spending from the current two-year budget period.
Q: Is that everything state government spends?
A: No. The total proposed budget at this point is $7.7 billion. Most of the additional money is federal funds paired with state spending, such as federal human services and highway money, but it also includes “special” revenue, such as tuition paid by college students.
Q: What is the “general fund”?
A: It's the state treasury, which is fed by state taxes. Legislative action on the budget always focuses on the general fund, which usually controls spending of non-general funds.
Q: A 21 percent increase in the general fund seems like a big increase. Is it?
A: Yes, but about $390 million of the $680 million increase in this latest version is “one-time-only” spending, on items that won't be repeated in the future, such as building maintenance, computer projects or deposits into trust funds and retirement accounts. If you look only at ongoing spending for programs that will continue into the future, the proposed spending is $3.57 billion, an 11 percent increase over the current two-year period.
Q: Would any state agencies have their budgets cut from current spending levels?
A: No. Increases are proposed from a few percentage points to as much as 30 percent to 40 percent.
Q: Where are some of the biggest increases?
A: The state Department of Corrections gets an increase of about 40 percent and human services is a 20 percent increase.
Q: Why the big Corrections Department increase?
A: The agency is dealing with faster-than-expected growth in the number of inmates and wants to increase treatment options for drug-addicted prisoners and sex offenders. The current budget also includes higher payments to regional and for-profit prisons.
Q: What's in the human services increase?
A: Quite a bit, since it's the largest single expense in the budget, at about $800 million of general fund money. It includes more money for community mental health services, expanded funding for the Children's Health Insurance Program, more money to pay “direct care” workers at nursing homes, group homes and other private companies that serve the aged and the disabled, and a higher share of state funds for Medicaid, the state-federal program that pays medical bills for the poor.
Q: How about public schools?
A: They would get an 8 percent increase in state funding over the next two years, on top of a 10.5 percent increase in ongoing funds that schools received during the current biennium. These two increases come after a decade of minimal increases, which prompted a lawsuit that led to a 2004 Montana Supreme Court ruling that the state is not adequately funding schools.
Q: Who put together this latest version of the budget?
A: The Senate Finance and Claims Committee, which is controlled by Democrats. The panel took eight budget bills passed by the House, condensed them into four bills, amended those bills and sent them to the Senate floor.
Q: How much did the Senate committee change the bills from the Republican-controlled House?
A: Quite a bit. The Senate panel added about $300 million in general fund spending.
Q: Is the Senate committee proposing more spending than Gov. Brian Schweitzer?
A: Yes, by $30 million to $40 million in the general fund.
Q: So what happens now?
A: The four main budget bills go to the Senate floor this week, where the full Senate will consider amendments and approve its final versions of the bills. Those bills then will go back to the House, which will reject those changes and send the measures to House-Senate conference committees.
Q: What's a conference committee and what will it do?
A: Each conference committee on each bill will have six members - three from the House and three from the Senate. The House will appoint two Republicans and one Democrat; the Senate will appoint two Democrats and one Republican to each committee. A majority of the members from each house must agree to any changes in the bill before the conference committee, so they must attempt to find a compromise. If they can agree on a compromise, the new version of the bill goes back to the House and Senate for a final vote.
Q: Are these four main budget bills the only bills in the budget mix?
A: No, not even close. Dozens of other minor spending bills and tax-cut bills are still before the Legislature, and will be part of the final negotiations putting together the state's tax-and-spending plan for the next two years.
Q: How much money is available to spend?
A: If the Legislature approved all of the existing spending bills, it would use up nearly all of the $1 billion surplus and have $100 million left over for the “rainy day” fund supported by Gov. Schweitzer - but have nothing left for any tax relief or rebates.
Q: How much of these spending proposals will have to be killed to make the budget work?
A: That depends on how much is desired in tax cuts and the rainy day fund. If you assume the rainy day fund is about $100 million, then for every dollar of tax reduction, there will have to be a commensurate reduction in the spending proposals.
Q: So we've got some tough decisions on what to cut out of the Senate version of the budget?
A: Yes. But keep in mind that about $130 million in spending proposals still alive aren't in the budget approved by the Senate committee. If all of those are killed and the Senate budget remains intact, that's $130 million to $150 million available for tax relief. But it's safe to say that portions of the Senate version of the budget could be on the chopping block.
Q: What type of tax-cut proposals are in the mix, and what would they cost?
A: Lawmakers in at least one house have approved tax cuts and revenue transfers that now total $450 million for the next two years. Most of these proposals have come out of the Republican-controlled House, but Democrats have been voting for some of these measures as well. They include income tax cuts, property tax cuts, tax credits for health insurance, renters' tax credits and business tax cuts.
Many of these tax-cut bills will die in the Senate. Some are potential survivors, but for every one that is approved, there will have to be a commensurate action to kill or cut back spending proposals that are still alive.
|
 |
 |
Add your comment now! Write your comment in the form below.
(Email address is for verification only. If you'd like to email a story, look for the link above)