HELENA - When Joan Miles looks at the numbers for her agency's budget and the job it has to do, she likes what she sees.
“This is going to do so many good things for the people of Montana,” says Miles, director of the state Department of Public Health and Human Services. “I just felt like the governor and the Legislature were very supportive of programs that help people.
Miles, of course, is talking about the state's 2008-09 budget, the centerpiece of the contentious 2007 Legislature that finally wrapped up business May 15.
Legislators patched together the budget in a five-day special session that came two weeks after the regular session had adjourned without approving one.
News coverage of the session usually focused on the pitched political battle between Gov. Brian Schweitzer, a Democrat, and the Republican-controlled House, who had trouble agreeing on spending priorities and the fate of a projected
$1 billion-plus surplus for the next two years.
Yet coverage often glossed over the actual contents of the two-year, $8.8 billion budget, which is packed with spending on everything from public health to prison cells - and some tax savings as well.
Highlights of the budget approved by the Legislature include:
n The “general fund” budget, the portion fueled by state taxes and usually the main focus of the budget debate, increased $755 million, or 24 percent above the current level of $3.15 billion.
However, $350 million in increases are for one-time expenditures that won't be repeated in the future. If one looks only at the increases for ongoing government programs, the amount is about $400 million, a two-year increase closer to 13 percent.
The general fund is about 40 percent of all state spending, which includes $3.4 billion of federal funds. If you consider the complete $8.8 billion budget, it increased $700 million over the current two-year budget, or 8.6 percent.
The increase helps pay for about 400 new full-time government employees.
n The budget has at least $140 million in general tax rebates and reductions, with the promise of another $20 million if the budget allows. These include a $400-per-household rebate this year, cancellation of $25 million in water-rights fees, $20 million in lower local school property taxes, and $20 million in tax credits for homeowners.
Most state agency budgets had double-digit increases. Those on the higher end include 24 percent each for the Revenue Department and the Corrections Department.
Public schools will get a net increase of $150 million in state money, a 12 percent hike over the two years. However, $40 million of that amount is one-time, meaning it won't be used to finance ongoing expenses, like teacher salaries.
A $31 million increase in state funds for the university system also will enable state colleges to freeze tuition the next two years.
n The vast majority of the spending hikes reside in five areas: health and human services, corrections, education, the Revenue Department and state construction projects. Together, these areas account for 85 percent of the general fund increase.
The largest dollar-amount increase goes to the Department of Public Health and Human Services, the massive agency that administers hundreds of health programs.
Its overall budget will grow about $400 million the next two years, to a total of $3.1 billion - a 13 percent increase.
John Chappuis, the agency's deputy director, says a big part of that hike is an increase in Montana's share of Medicaid, the state-federal program that pays medical bills for the poor.
Because Montana's economy improved in the past two years, the federal government requires the state to pay a bigger share of the Medicaid bill.
Yet the agency, with support from the Legislature, also has a litany of new and expanded programs to help the mentally ill and disabled, expand health coverage, assist troubled families and increase pay for workers in nursing homes, group homes and in-home care.
These include 20 new caseworkers to investigate and help resolve cases of child abuse and neglect; community mental health programs, such as suicide-prevention, drop-in centers and crisis-treatment centers; expanding eligibility for the Children's Health Insurance Plan; and a pilot program to provide government-funded health insurance for low-paid home-health workers who help the elderly in their homes.
The Legislature also approved higher Medicaid payments to doctors, to encourage more physicians to accept new Medicaid-covered clients, Chappuis said.
Chappuis and Miles said these significant expansions had bipartisan support from lawmakers, who saw the programs as “preventative” health measures that will cut costs in the long run.
“The Legislature really did a nice job,” Chappuis said. “This is the best budget I've seen at the agency, and I've been here since 1980, in which the Legislature is trying to address so many needs.”
Another large increase - $67 million, or 25 percent - goes out to the Corrections Department. The agency also received $28 million to cover cost overruns from the current two-year budget period.
The money will cover the costs of an expected 5.4 percent annual increase in criminal offenders, as well as 36 new probation and parole officers, higher rates paid to private and regional prisons, and up to 120 beds for new programs to treat methamphetamine addicts.
Last but not least, the state Revenue Department saw its two-year general fund budget increase 24 percent, to $97.6 million. It's also adding 34 new full-time workers.
Department director Dan Bucks says the money is a badly needed increase for an agency that has seen its workload skyrocket over the past five years, while actually losing employees - until now.
About $4 million will pay to set up a free, electronic filing system for individual income taxes.
Bucks says the agency is being inundated with paper forms, many of them filed by businesses. Getting individual income taxes on electronic filing will help ease the paper burden, he says.
The budget increase also will pay for the agency's most comprehensive property reappraisal effort in 40 years, Bucks says, and for increased audits and compliance efforts aimed mostly at nonresident business owners and taxpayers.
“Any time someone doesn't pay (taxes they owe), it raises taxes for Montanans or reduces the services they receive,” he says.
Coming Monday: A closer look at the impact of public school funding approved by the 2007 Legislature
What happened to that extra $1 billion?
HELENA - So what happened to that extra billion bucks that the Montana Legislature had at its disposal this year?
It's not all spent, and it won't be, since some has been set aside as a budget cushion for the next two years.
But at least two-thirds of the money will go to a variety of government programs and expenses.
Before we get into the details, however, a few short words about the size of the “surplus” and how it came to be.
Every two years, the Legislature sets a state budget for the coming two years based on the amount of state tax revenue expected during that period.
When the tax revenue comes in higher than expected, it mostly just piles up, unspent. Legislative revenue forecasters also look ahead to see what to expect in the next two years.
This year, the forecasters said the Montana state treasury would have an additional $1.4 billion to cover increased expenses, new programs, tax cuts or whatever the Legislature wished to do with it for the next two years.
It's the largest budget surplus the state has ever had, fueled by an economic boom that led to much higher-than-expected collections of state income taxes and oil and gas taxes.
Here's how the Legislature disposed of that extra money:
About $670 million goes for spending increases for ongoing government expenditures, including $400 million just to cover inflationary increases of existing programs.
$190 million for construction and maintenance of state buildings and computer-technology projects. The state will use the surplus to pay cash for these projects, instead of the usual method of incurring long-term debt.
About $120 million in one-time tax rebates, including $400-per-homeowner rebates this year.
Another $95 million in spending on one-time items. An example is $10 million to public schools to finance start-up costs for full-day kindergarten.
About $83 million to cover state agency cost overruns for the current fiscal year. The departments of Corrections and Public Health and Human Services had large overruns.
A $50 million, one-time deposit into the Teachers Retirement System, to help shore up the financially ailing retirement fund.
The state's $15 million share to settle the Blackfeet Indian Tribe's water rights case.
The $8 million cost of the 2007 Legislature.
A $100 million “ending fund balance,” which is a year-end cushion that could cover any emergency spending needs.
Another $85 million in leftover funds, part of which may be used to fund an additional homeowner tax credit next year.
Two years from now, will Montana have another huge surplus pile of cash in its treasury? Or might the spending approved this year eat up any potential surplus, creating a deficit?
It's too early to say, of course. But by the time autumn rolls around, state revenue forecasters will be getting out their crystal balls, making predictions on what the 2009 Legislature might face.
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