Here's what's in Gov. Gianforte's $18 billion budget proposal

Nov 28, 2024

By MBPC Staff

Shaylee Ragar, MTPR, 11/28/24

Gov. Greg Gianforte is proposing a nearly $18 billion budget to keep Montana’s government up and running over the next two years. The state is projected to continue to bring in strong revenues. Gianforte aims to invest in a few big projects, while cutting taxes.

MTPR’s Shaylee Ragar joined Corin Cates-Carney to talk through the big ticket items.

Corin Cates-Carney: Shaylee, give us a quick primer on the governor’s proposed budget – why is it important?

Shaylee Ragar: Sure. This is the public’s money. This is what you’re taxed for and this is how the state could spend those taxes.

Gianforte gets to use his budget proposal to highlight his priorities for state lawmakers before they arrive in Helena. Here’s how he described his guiding principles.

“The strong foundation of a prosperous society is made up of three pillars: economic freedom, safe communities, and strong families who have access to opportunities."

It’s unlikely that lawmakers will pass Gianforte’s budget as is. They can pick and choose whatever they want from the proposal. The budget is a months long negotiation between the governor and lawmakers.
Tax cuts

CCC: So, Gianforte has a slogan about his priorities, but how is that reflected in the details?

SR: Tax cuts are again a top priority in Gianforte’s third budget.

Gianforte is asking for another cut the state’s top marginal income tax rate by 1%. He also wants to expand a tax credit for low-income workers by 5%.

CCC: Who benefits from these cuts?

SR: Anyone who makes more than $18,000 a year could see this 1% income tax cut under Gianforte’s proposal.

Montana’s tax credit for low-incomes is based on a similar federal tax credit. So let’s say you qualify for that, and your federal credit amounts to $3,000. Right now, the state offers 10% of the federal credit — so that’d be $300. Gianforte wants to up the state’s offer to 15% of the federal credit.

CCC: So nearly all Montana workers would benefit from a tax cut or the credit?

SR: Yes. And while the governor is proposing an income tax cut across the board, Democrats argue this system unfairly benefits the wealthy. The Montana Budget and Policy Center, which often advocates for policies that benefit low- and middle- income residents, offered an analysis of the tax cut. It shows that, with both income tax proposals, the wealthiest 1% of households in Montana will see an income tax cut of about $10,000 annually. Middle-income families will see, on average, $100 to $400 annually. Critics say policymakers also need to consider how a reduction in revenue might impact the state in a future recession.

Rose Bender with Montana Budget and Policy Center told lawmakers that tax relief should be, “more targeted and ensure that we are able to fully take care of those living on fixed incomes today.”

She pointed to the governor’s proposed property tax change as a good example.
Property taxes

CCC: Property tax bills have certainly been top of mind for lots of Montanans. What’s Gianforte proposing?

SR: His key policy here is called the Homestead Exemption. That would cut property taxes for primary Montana residences, while shifting a higher tax burden onto second and short-term rental homes. That’s projected to reduce property taxes by 15% for 215,000 primary residences and 18% for 32,000 small businesses.

Property taxes are again projected to rise in the coming years. Gianforte has not proposed a general lower rate for property levies. That’s something others have called for.
State revenue

CCC: If the state is cutting tax rates does that mean there will need to be budget cuts to even out the spending?

SR: Montana has strong revenue streams coming in — stronger than expected. The governor has said the state isn’t looking at any major cuts to spending.
Public safety spending

CCC: So let’s get into more detail on the governor’s spending plan, now that taxes are out of the way. What does the spending side of the budget look like?

SR: Gianforte says he’s really focused on public safety. That includes a $7 million proposal to boost Highway Patrol pay, $150 million to expand the Montana State Prison by 500 beds and $250 million to create a commission to create a long-term, public safety plan.

CCC: That sounds similar to one of Gianforte’s big budget items in the previous budget — to create a behavioral health and disability services plan for the state.

SR: Yes. Gianforte is following up on that this session. Over the last two years, a commission has been studying the care systems, and came up with recommendations for improvement. Gianforte is asking the Legislature to pass just under half of those proposals, totaling about $100 million in state and federal funds. Those recommendations include expanding community behavioral health care clinics, redesigning the reimbursement rates for youth in-state residential care and investing in school-based care initiatives.
Medicaid expansion

CCC: On the topic of health care — Medicaid expansion, the federal health coverage program for low-income adults will expire in 2025 if the state government doesn’t reauthorize it. The federal government picks up most of the tab, but Montana pays 10 percent. Where does Gianforte stand?

SR: Gianforte’s budget calls for reauthorizing and maintaining the Medicaid expansion program in Montana. He may have a battle with some Republican lawmakers who say the government should not subsidize health care. But Gianforte may earn points with them because he calls for including so-called work requirements for able-bodied recipients of Medicaid expansion. The Biden administration rejected those requirements for Montana’s program last time it was reauthorized. But with President-elect Donald Trump taking office, it could be a different story.

CCC: Got it. Any last items you’d like to highlight, Shaylee?
Child care, teacher pay, pensions

SR: I’ll touch on a few things we’ll definitely be covering further. Gianforte’s proposal would have the state maintain funding for a child care scholarship for low-income families, but doesn’t otherwise allocate money for care. Providers have asked for help with low child care wages.

On education, Gianforte is asking to boost early-career teacher pay, an incentive program for schools to restrict cell phone use in class, and an expansion for a private school tax credit.

He’s also asking for money for the state’s public employee pension system, which is vulnerable to economic recessions. Finally, there’s a proposal to put toward housing infrastructure.

I know we’ve just covered a lot in a short amount of time, but we will be digging into all of these proposals further when the Legislature convenes in January.

CCC: Thanks for your reporting, Shaylee.