Carly Graf, Lee Enterprises, 11/19/24
Gov. Greg Gianforte released details on his proposed roughly $18 billion budget last week, giving state lawmakers and residents a glimpse into his vision for the state over the next two years.
His self-described "conservative" plan features decreased property taxes, investments in public safety and boosts to teacher pay.
House Bill 2, the major appropriations bill, charts a plan for the majority of the state government's earnings and spending every two years. The governor works with the state Legislature to craft and pass the budget.
During a press conference Nov. 13, Gianforte pitched his plan as a balanced budget that avoids cuts to essential services and caps spending increases at a level below inflation, which he repeatedly blamed on White House policy.
Gov. Greg Gianforte released details on his proposed roughly $18 billion budget last week, giving state lawmakers and residents a glimpse into his vision for the state over the next two years.
His self-described "conservative" plan features decreased property taxes, investments in public safety and boosts to teacher pay.
House Bill 2, the major appropriations bill, charts a plan for the majority of the state government's earnings and spending every two years. The governor works with the state Legislature to craft and pass the budget.
During a press conference Nov. 13, Gianforte pitched his plan as a balanced budget that avoids cuts to essential services and caps spending increases at a level below inflation, which he repeatedly blamed on White House policy.
The governor championed his proposal to expand the state’s earned income tax credit and lower the income tax rate for those who earn more than $20,500 annually from 5.9% to 4.9%. Montanans filing their taxes next year will see two primary tax brackets for individuals, this being the highest of the two. If passed, these income taxes would be the third time Gianforte has reduced the tax rate for this class of income earner since taking office.
According to census data, the average income per capita in 2022 in Montana was $37,837. Earning minimum wage at 40 hours a week brings home just over $21,400.
"Ultimately, it’s your money, not the government’s," Gianforte said during the press conference.
Critics, including the Montana Budget and Policy Center, say this income tax cut would disproportionately benefit the wealthiest in the state. One estimate it shared shows Montanans who earn over $749,000 saving more than $9,500 as compared to $39 for the lowest earners in the tax bracket.
The budget proposal also include the homestead exemption, crafted through a bipartisan property tax task force commissioned by Gianforte. The policy is intended to lower the tax rate for primary residents, including on their long-term rental properties, and small business owners. It would make up the revenue difference by bumping up the rate for second-home owners, large commercial properties and operators of short-term vacation rental like Airbnbs.
Full-time homeowners would see reduced costs by about 15% and 18% for small business owners, estimates suggest, impacting about 215,000 primary residences, 130,000 long-term rental properties and 32,000 small businesses.
"Getting this proposal across the finish line as quickly as possible is one of my top priorities in the upcoming legislative session," Gianforte said during last week's press conference, noting he wants to see these rate changes for the 2025-2026 fiscal year. "We need to get it done early."
Gianforte needs buy-in from lawmakers to get his budget passed, a process that requires scores of hours at the negotiating table between his office and the various legislative caucuses as well as input from agencies and interest groups.
Rep. Katie Sullivan, D-Missoula, newly minted minority leader of the House Democrats, criticized the property tax cut as yet another break for wealthy Montanans over middle- and low-income earners.
"Montanans are sick of feeling like they keep paying more and getting less," she said. "Democrats want to bring down the costs of living for all, instead of lining the pockets of millionaires."
Over the next two years, Gianforte calls for $6.6 billion in general fund expenditures to cover the ongoing expenses associated with governing. The money comes predominantly from income taxes, which are cut under his plan. General fund, or state money spending, is down from over $7 billion in the 2023-2024 and 2024-2025 fiscal years, passed during the last legislative session.
His proposal leaves a balance of about $555 million in the general fund at the end of the biennium, which concludes June 30, 2027.
Montana’s Department of Public Health and Human Services continues to be the agency that would receive the greatest allocation of state money, including both general fund and other special revenue sources. Next fiscal year alone it would be allocated $3.4 billion, down almost $200 million from the current.
Medicaid expansion, which will sunset in 2025 unless reauthorized by the state Legislature, is fully funded in this budget, according to Gianforte, although he suggested lawmakers implement work requirements into the program. He did not include plans for expanding the Best Beginnings scholarship, a subsidy to make child care more affordable, nor did he take another stab at a child tax credit, which failed during the 2023 legislative session.
Public safety is another top priority for the governor, who calls safe communities a pillar of prosperity.
Gianforte’s budget funds pay increases and investments in new equipment for the Montana Highway Patrol, more prosecutors, forensic scientists, judges and support for crime victims. It also allocates $6.5 million for correction officers, $8 million for community opioid response and $2 million in drug treatment courts.
Building off legislative work from the interim period since the last legislative session, Gianforte proposes $150 million in one-time-only spending to expand the state prison and add approximately 500 beds.
MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.