Was the $208,698 special Montana legislative session worth it? Depends who you ask

Apr 23, 2018

Great Falls Tribune

So was it or wasn’t it?

Was November’s special session of the state Legislature called by the governor necessary? Did lawmakers have to convene in Helena for about two days to deal with a $227 million shortfall to the state’s $10.3 billion biennial budget sparked by lower state revenues and an expensive fire season?

Well, it depends on who you ask.

Democrats and Republicans recently increased the intensity and frequency of salvos over the state’s budget cuts with Democrats saying the problems were caused when the Republican-led Legislature adopted a spending plan during its regular session that was “irresponsible” and the GOP firing back that the cuts were the Gov. Steve Bullock’s decision and November’s special session, which, according to the Legislative Services Division, cost $208,698, was unnecessary as state revenues are increasing.

One Republican lawmaker labeled the session a “kneejerk” reaction by the governor.

The barbs come as the Department of Public Health and Human Services deals with large public outcry from $49 million in cuts to programs and services.

GOP Rep. Ron Ehli of Hamilton and Sen. Fred Thomas of Stevensville recently wrote an opinion piece bashing Bullock.

“There is a real tragedy of Gov. Steve Bullock’s deep cuts to the Department of Health and Human Services (DPHHS) budget: He didn’t have to make them,” they wrote.

“Just like in a household, when there is a tight budget situation as certain amount of belt-tightening needs to happen,” Ehli and Thomas wrote. “But there is absolutely no reason for Bullock to make the cuts to the neediest Montanans to the extent that he is.”

The governor’s office released a statement that Bullock had “no choice but to make cuts to the budget when he did and where he did.”

They said some GOP members are being “less than honest” about budget cuts and all Republican lawmakers voted to implement the cuts the governor is making.

The governor’s office said Bullock was mandated by state law to call the special session, his first since being elected governor in 2012, if the projected ending fund balance was below $143 million.

DEMOCRATS: Montana is not Washington, D.C. and we expect more of our lawmakers

REPUBLICANS: The tragedy of Montana governor's budget cuts is that they are unneeded

The $70 million cost of the fire season combined with revenues “over-estimated” by the Legislature of $75 million and “a looming school payment at the end of November put the ending fund balance well below the legal amount,” the governor’s staff said.

The governor’s staff said Republicans on the House Taxation Committee OK’d a revenue estimate $100 million higher than projected and killed a proposed tobacco revenue increase that would have brought in $60 million over the biennium.

They also noted that through the special session the state was able to avoid $150 million in cuts through fund transfers and other legislation.

However, Rep. Nancy Ballance, R-Hamilton, said current legislative revenue estimates prove the November special session was not necessary.

“If we had not had the special session and not made the cuts we’d be having an entirely different conversation now,” she said.

Ballance said Republicans said the call for a special session was premature and put together a good revenue estimate.

 “These were his decisions, he has to own them,” Ballance said of Bullock. “Where we are now is based on decisions that he made.”

“This was a kneejerk reaction by the governor’s office to react to something that was not an issue,” she said.

Ehli and Thomas said state revenue has been increasing since the beginning of the year and projections are positive.

“This trend is along the lines of what Republicans and the Legislative Fiscal Division had estimated when making decisions about the budget,” they said.

A state revenue report released April 6 shows that Fiscal Year 2018 general fund revenues through the end of December are $181 million, or 18.2 percent higher than 2017, which is mostly due to funds the Legislature transferred into the account to help with budget shortfalls.

The report also credits the increase on timing of property tax collections, corporation income tax audits and growth in estimated payments and strong growth in individual income tax.

State Sen. Llew Jones, R-Conrad, a member of the Legislative Finance Committee, said the numbers look 'promising,' but he expressed caution as to what portion of it is from pretax planning.

“Still, each month of continued income adds to my optimism,” he stated.

Dan Villa, state budget director who has been at odds with earlier estimates, said he was “glad the legislative estimates are getting closer to reality but there's still a long way to go,' he said in an email. 'No one needs to be reminded of the pain caused by an unrealistic and political revenue estimate.'

Ballance, Ehli and Thomas said lawmakers urged the governor to avoid DPHHS cuts and public services and instead focus on the bureaucracy from the agency’s $4 billion budget.

The governor’s office countered that he could only make up to 10 percent of cuts to each executive agency’s general fund dollars and there are some parts of general fund spending that he does not have discretion to cut. However, legislators can.

He said $218 million in cuts had been made before the special session and there was no way to do more cuts without hurting essential services. He said DPHHS has 480 fewer positions filled due to reductions in force and unfiled from budget cuts.

Ehli and Thomas say Bullock could have sided with protecting Montana’s “most vulnerable citizens who depend on help from government services for their daily lives. But he has so far shown minimal interest in doing so, and has put very little effort into finding better solutions.”

Ehli, the House majority leader and Thomas, the senate majority leader, say many lawmakers think Bullock will use the funding of health services as a political stick to force unpopular permanent tax increases.

Lt. Gov. Mike Cooney entered the fray Thursday, saying Republicans “want to pass the buck.”

“They want Montanans to forget that they caused a $100 million revenue estimating error that threw the budget off course for the foreseeable future,” he wrote. “They want Montanans to forget that they bled the rainy-day-fund dry prior to the start of the worst fire season in the history of Montana. And they especially want Montanans to forget that every single Republican voted for each and every cut during last November’s special legislative session, and made them permanent.

“I spent 12 years in the Montana State Legislature and never before have I seen such deceit,” he wrote.

Once again, the Republican claims of $35.7 million offered to renew a contract with CoreCivic to run the private prison, the Crossroads Correctional Facility in Shelby, comes into play, much as it did during the special session.

PRISON CONTRACT: State rejects offer over Shelby prison contract

Republicans note Bullock could have used $15 million of that to mitigate cuts in DPHHS. Earlier this month the state rejected a proposed deal with CoreCivic, saying they could not agree on what it would take to extend the contract, which expires in 2019, for another two years.

Villa said the state’s final offer was that it would pay Core Civic $69 per day per inmate and require a $32.3 million user fee payout to the state. The contract would begin in late 2019 and expire June 30, 2021.

The state also wanted five full-time employees added in Shelby for program parity with what is offered at the Montana State Prison in Deer Lodge.

He said Core Civic was seeking a $72.14 per diem per day for this biennium and $75.58 for the next and $35.7 million for the user fee payout.

CoreCivic was hopeful the negotiations would continue.

Debate has trickled downward into re-election campaigns of some state lawmakers.

Rep. Jacob Bachmeier, D-Havre, said recently he is approached by residents wherever he goes.

“I’ve heard tragic story after story of cuts and people not receiving the services they need to have dignity,” Bachmeier said.

He said the cuts will impact 14,000 healthcare providers in the state. He said the budget approval was led by some of the more radical Republicans who forced “ultra-irresponsible ideals” on the state “and that is why we are where we are at.”

Bachmeier said he recently received a letter from a constituent from a county detention center, who told him she has severe mental health issues and they refuse to treat her with counseling and therapies.

“The cost of holding her in the detention center will cost much more than treating her like a human being and providing her with the services she deserves,” he said.

And as he campaigns for re-election and knocks on doors, he says people are not asking him about being Republican or Democrat as much as: “What are you going to do as a candidate to restore services people so desperately need?”

He blames the GOP.

“Republican leadership forced a budget on Montana that was irresponsible and left us powerless to do anything about it,” he said.

Rep. Greg Hertz, R-Polson, said he and many other Republicans would have chosen cuts other than those made by the governor.

Hertz, who is the speaker pro tempore, said he was awaiting revenue estimate reports in early May, which would tell him if a special session was necessary.

“It looks like at least later this summer, once Fiscal Year 2018 ends, some of these cuts will be alleviated because we will have exceeded revenue projections,” he said, adding it was not easy for those who had to suffer the cuts through the winter months.

Brent Mead, executive director of the Montana Policy Institute, a free-market think tank, said in the long-term picture both sides bear responsibility.

"Over the long-term, both the legislature and executive branch share an equal blame for escalating state spending that consistently outpaces inflation and population growth," he said.

"Some of the cuts enacted last fall and this spring make good policy sense, regardless of the budget situation, such as having the state pay for certain employees to have either a cell phone or a landline, but not both," Mead said.

On the more controversial cuts, Mead said “some of the blame should go to the governor's office and their unwillingness to target non-essential, or new spending programs,  in order to preserve long-time core services."

He said the governor did not look to reduce Department of Commerce grant programs that pay for things like food trucks, dog toy companies, or rescind a $50,000 contract to make a series of Youtube videos.

He said the governor should have revisited items like awarding a $7 million tourism promotion contract to an out-of-state firm.

“Instead of targeting non-essential spending like these programs, he targeted human services programs. In fact, while the governor's office was warning of budget cuts to human services he was on a statewide tour promoting Commerce grants."

Heather O'Loughlin, co-director of the Montana Budget and Policy Center — a nonprofit organization that does research and analysis on budget, tax and economic issues  —said it is important to acknowledge where parties have and can find common ground.

“Without a doubt, policymakers from both sides of the aisle recognize these budget cuts are hurting families and communities," she said. "We are also seeing recognition that we need to talk about our tax system and whether it is keeping pace with today’s economy."

O'Loughlin noted a newly formed joint subcommittee has met to discuss the changing economy and impacts of long-term viability of Montana’s tax structure.

She said it has included discussions on: revenue trends, the growing economy and how it relates to tax policy, managing volatility; and addressing the tax “gap”, or the amount owed under current law but not being paid.

She also noted that during the special session, the two tax committees held a very interesting hearing on the potential of eliminating tax credits, which cost the state hundreds of millions of dollars in lost revenue.

"While that bill did not pass (and in our view, had some flaws), it represented a very thoughtful discussion about why tax credits are in place, the extent to which they are changing behavior or merely rewarding behavior that would occur otherwise," O'Loughlin said.

"These are positive steps, and we look forward to seeing policymakers come together to address the challenges that we face in a responsible way,” she said.

Phil Drake can be reached at 406-422-0772 or pdrake@greatfallstribune.com. Drake at one time was employed by the Montana Policy Institute.

Montana Budget & Policy Center

Shaping policy for a stronger Montana.

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.