What’s In and What’s Out in the Governor’s Proposed Budget?

Nov 22, 2022

Table of Contents

Introduction    1

Important Investments for Families and Communities    2

Missed Opportunities    2

Department of Public Health and Human Services    3

Health Provider Rate Adjustments    3

Medicaid Programs and Caseload    4

Behavioral Health and Developmental Disability    4

DPHHS Staffing Woes    4

Child and Families Services    5

Department of Corrections    5

Office of Public Defender    6

State-Tribal Investments    6

Indian Language Program    6

Tribal College Assistance Program    6

Indian Country Economic Development    7

DCI Enhancements which include FTE’s working on the Missing & Murder Indigenous    7

Department of Commerce    7

Secretary of State    8

Department of Revenue    8

Department of Labor and Industry    8


The 2025 Biennium budget represents a once-in-a-generation opportunity to invest in the services and infrastructure that communities and families need to thrive. For too long, Montana has failed to meaningfully invest, and now families, businesses, and Montana communities are feeling the consequences, with lack of adequate housing, child care, and critical health services that will support our families and keep Montanans in the workforce. 

While the governor’s proposed budget takes some important steps to supporting families, the proposed sizable on-going tax cuts aimed at the wealthiest households will leave us, yet again, inadequately investing in services that average Montana families really need. (MBPC will provide a more detailed analysis of the Governor’s tax proposals in the coming weeks.)

Important Investments for Families and Communities

The proposed budget includes expanded Medicaid coverage for one year after the end of pregnancy, providing improved maternal and infant health for Montana families. Right now this coverage ends 60 days after pregnancy. Federal legislation in 2021 allowed states to expand this coverage to 12 months and maintain the federal matching funds. More than half of states have expanded postpartum coverage over the past two years. 

The proposed budget provides much-needed additional support for the Office of Public Defender, providing about 20 new additional staff positions to support caseload and clients interacting with the criminal legal system. While this investment is an important step in addressing the historic underinvestment in OPD, it does not match the level of spending across the rest of Montana’s criminal legal system.

The budget proposes provider rate increases for healthcare providers and other service providers funded by state and federal funding. In total, the governor’s budget proposes $43 million in state funds (both general fund and state special revenue funds) to provider rate increases within the Department of Public Health and Human Services, matched with $130 million in federal funds. In 2021, the executive and legislative branches embarked on a study of Montana’s provider rates. More analysis needs to be done to see how the budget’s proposed provider rates compare with the study’s recommendations.  

The executive budget is proposing a state child tax credit (CTC), set at $1,200 per child under the age of six. MBPC is awaiting further detail on the structure of the CTC, but the state can look to the successful expansion of the federal CTC in 2020. If the federal credit had been made permanent, it would have helped lift 45 percent of all Montana children and 59 percent of American Indian/Alaska Native (AI/AN) children in Montana out of poverty. Montana’s CTC needs to be targeted, refundable, and permanent to help Montana families.

Missed Opportunities

The proposed budget provides no meaningful investment in child care. Other states, like North Dakota, are addressing the shortage of child care options head on, through state surplus funding to improve access and affordability. (For example, North Dakota is proposing $80 million in state investment to address child care affordability.) While the proposed budget provides a modest provider rate increase for regulated providers, the budget fails to maintain critical support for families accessing the Best Beginnings Scholarship. The result of this will mean thousands of families will see their copays for child care increase in January with little support on the horizon. 

The proposed budget provides no direct state investment in affordable housing. Montana is facing a crisis in access to affordable housing for workers and families. While the governor is proposing support for water and sewer projects by municipalities, the governor did not include his Housing Task Force’s recommendation to establish an on-going fund source and additional funding for the Housing Montana Fund (the state’s housing trust fund). The current fund balance is insufficient to originate a new loan. There are 31 states that have a funded state housing trust funds.

While the governor has proposed maintaining investments in tribal communities, including Montana Indian Language Preservation funding and Indian Country Economic Development funds, it is discouraging that the governor has not prioritized the use of the $2 billion surplus to boost these programs. Similar to his predecessor, Governor Gianforte is proposing to include these investments in the base budget, and we are hopeful the legislature will accept that recommendation. 

The proposed budget is putting an additional $180 million into expanding capacity at Montana’s prison system, a system that disproportionately impacts Ingigenous, Black, and People of Color. Rather than expanding a system that criminalizes poverty, Montana could invest that money into housing, health services, including mental health and substance use disorder, and education, with a goal of reducing the prison population and better supporting families.

Department of Public Health and Human Services 

Overall, the executive branch is proposing a 16 percent increase in total funding for the Department of Public Health and Human Services (DPHHS). The 2025 proposal includes $1.43 billion in general fund and $7.09 billion in total funds. 

Health Provider Rate Adjustments 

The budget says it will increase provider rates for providers included in the provider rate study at a portion of what was proposed in the provider rate study. For services that were not included in the provider rate study, he has proposed a 4 percent in FY 24 and an additional 4 percent in FY 25. Across all DPHHS agencies, the  budget includes $40 million in general funds, $130 million in federal funds, and $2.7 million in state special revenue (SSR) ($172 million total) for provider rate increases over the biennium. In addition, the governor is proposing to appropriate $25 million in general fund dollars to the DPHHS Director’s Office to provide “one-time” supplemental provider rate adjustments to certain providers. The budget provides no detail on the use of those funds.

Medicaid Programs and Caseload

The budget appears to be projecting caseload growth for most Medicaid programs except Healthy Montana Kids. Thus, the executive budget does not appear to be factoring in the impact of redeterminations once the federal Public Health Emergency ends and the end of continuous eligibility in Montana.  

The budget assumes caseload reductions for many of the Medicaid waiver services, including for people with developmental disabilities and seniors. As the legislature considers the budget, it will be important to tease out exactly why the Department is projecting fewer people accessing these services, especially given Montana’s growing aging population and the boost in provider rates (that hopefully will help expand the number of providers willing to take Medicaid).

Behavioral Health and Developmental Disability 

DPHHS has combined two previous divisions that handled developmental services and mental health and substance use disorder services into Behavioral Health and Developmental Disorder Division. The 2025 requested budget includes a 21.4 percent increase in general fund ($252 million) and a 11 percent increase overall ($1.05 billion). The budget adds 11 FTE compliance specialists, previously cut in the 2021 session. The budget also transfers back to DPHHS the Comprehensive School and Community Treatment (CSCT) program, providing mental health services to school-aged children. The 2021 legislature transferred this program to the Office of Public Instruction, and there’s been a fair amount of attention to the loss of services many families and schools experienced. The budget also proposes $16.6 million in additional funds to the HEART initiative, providing community substance use disorder services, funded by additional recreational marijuana revenue.

DPHHS Staffing Woes 

As of August of 2022, DPHHS was experiencing a vacancy rate of nearly 20%, with more than 550 positions open. This includes significant vacancies within the state health facilities, caseworkers for the Child and Family Services Division, and staffing within the Human and Community Services Division that handles eligibility determinations for health and safety net programs. The governor is requesting to transfer 50.50 authorized FTE from the Montana State Hospital and the Intensive Behavior Center in the Healthcare Facilities Division, to several other divisions within DPHHS. This includes case workers within the Child and Family Services division, additional attorneys within the Director’s Office, and positions within the Disability Employment & Transitions Division. The budget states that, “due to the extended position vacancies and staffing issues at the Montana State Hospital and the Intensive Behavior Center, these FTE are not needed in the Healthcare Facilities Division for the 2025 Biennium.” 

Overtime proposals appear to be another way the executive branch is dealing with staffing challenges. There are overtime proposals for Offices of Public Assistance, Child and Family Support Division, Montana State Hospital, and the Montana Veterans Home.

Child and Families Services 

For Child and Family Services, the governor is proposing an overall increase in funding of $16.1 million, or 7.4 percent increase, over the last biennium. The Department is projecting a reduction in foster care caseload, but an increase to adoption and guardianship caseload. This will be something for the legislature to consider in the state’s effort to reduce the use of foster care and instead investing in permanent homes for foster-care involved youth.

The budget also proposes  transferring the Family Violence Prevention Services grant to the Department of Justice (DOJ) to consolidate this grant with the other domestic violence-related grants administered by the DOJ.

Department of Corrections

The Executive Budget proposes a 15.5 percent increase in general fund for the Department of Corrections (DOC) budget. This is a suggested $66 million increase in general fund over the 2025 biennium.  The budget provides provider rate increases across DOC divisions. The budget includes a similar 4 percent provider rate adjustment in each fiscal year as in health services, but also includes a one-time additional bump in provider rates of 2 percent. 

The budget provides a Present Law adjustment for differential pay for specific shifts or job duties, as well as overtime pay due to the change to 12-hr shifts, equaling a $4.8 million increase. The proposed budget also includes a new proposal to increase pay at a $2/hr increase for Correctional officers at the state prison and a $3/hr increase for correctional officers at the women’s prison and Pine Hills. This would equalize pay for correctional officers across DOC facilities.

Unfortunately, the budget provides little new support for rehabilitation or reentry programs, but does appear to maintain the criminal justice reinvestment programs established by the legislature in 2017. One new proposal provides $2.1 million for a statewide transitional living model to assist with offender reentry “by contracting with a single entity to provide regulation over housing providers.”  The budget adds 1 FTE request to oversee the program. 

In addition to the DOC budget reflected in Section D, there are also sizable funds proposed in the capital projects budget (in Long Range Building Program, Section F). The budget proposes spending over $170 million in capital projects at the Montana State Prison, including $135 million to renovate and expand low-side housing. The budget also proposes $9 million for the construction of a new multi-purpose facility. The budget does not provide much detail on these projects, but many appear to be linked to the previous DOC capital master plan conducted in 2020. 

Office of Public Defender

The Executive Budget proposes a 22.5 percent increase for the OPD budget. This is a suggested $17.7 million increase in the use of general funds over the 2025 biennium. The budget requests roughly $3.5 million to fund 20 additional FTE across OPD divisions, to address long-term gaps in staffing across the agency. The budget maintains additional $1.5 million in funds for increased cases in Yellowstone County (previously funded through federal ARPA funds). The budget also includes a “rapid response” contingent fund, providing the governor’s budget director authority to release additional funds to OPD to address rises in caseload. 

State-Tribal Investments

Indian Language Program

The governor’s budget proposes maintaining the current funding level for the Indian Language Preservation program (MILP) funded under the Office of Public Instruction. The program has $750,000 allocated for each fiscal year for both years which totals $1.5 million. There is no difference in funds between the 2023 biennium and 2025. The governor is proposing to put this funding in the base (and no longer designate as one-time-only), and the funding is marked restricted. Restricted means that funding is marked specifically for that program and cannot be used for another purpose. 

It is positive that the governor has maintained the funding; however, when considering the amount of surplus funds available to the state, no further investments to MILP is a drawback. MILP is important because it confronts federal policies and practices contributing to language loss today. It has also proven to positively impact American Indian students’ academic success, increased self-esteem, and a greater sense of cultural identity and belonging. 

Tribal College Assistance Program

The governor’s proposed budget maintains the on-going state investment in tribal colleges (tied to the attendance of non-tribal members) within the Office of Commissioner of Higher Education. The governor has also proposed funding for “HiSET to Tribal Colleges” which in previous years was declined but has made a reappearance for this session. It is a program for tribal colleges to provide classes and training to individuals and students to complete the high school equivalency test. This will help students be able to continue their education if they wish to attend college. Thus, in addition to the base funding of about $2 million per year, the budget requests an additional $350,000 for each fiscal year for HiSET, totaling $4.75 million for the 2025 biennium. 

Indian Country Economic Development

Governor Gianforte’s Budget proposal maintains funding for the Indian Country Economic Development (ICED) Program within the Department of Commerce and would move the funding into the general fund base budget. The funding is proposed at $1.75 million over the biennium. While the governor is proposing boosts in many of the other economic development programs, this proposal is flat funding from the previous biennium. 

DCI Enhancements which include FTE’s working on the Missing & Murder Indigenous

Within the DOJ Division of Criminal Investigation (DCI), the governor is requesting $604,113 for FY 2024 and $580,799 for FY 2025 for the program personal services and operating expenses for 5.00 FTE within the Division of Criminal Investigation. The description notes that this proposal would “support and coordinate the statewide Missing Murdered Indigenous Persons Program,” but provides no additional detail on how much will be dedicated to that effort.

Department of Commerce

For the Department of Commerce Housing Division, the governor requests $20.2 million over the biennium, a 10 percent reduction from the past biennium. All of this funding is federal funds. Montana Housing primarily administers federal programs and the two state housing programs (the Coal Trust Multifamily Homes loan program and the Housing Montana Fund) do not receive general fund dollars and there is no on-going funding source for the Housing Montana Fund.  

The governor’s budget provides no direct state investment in housing. In the budget announcement, the governor has proposed to transfer $200 million in general fund dollars to expand water and sewer infrastructure that is intended to help increase housing supply and Montanans’ access to affordable housing. (This funding is not reflected in the budget and would likely come as a separate piece of legislation.) The governor’s investment in infrastructure is a good first step but the lack of any additional resources available to support affordable housing construction, rehab, or acquisition is discouraging. Montana’s existing housing programs and resources are woefully inadequate to fill the shortage of affordable and available rental housing for households living on extremely low incomes. 

Secretary of State

The Office of the Secretary of State is funded entirely by proprietary funds and has not been funded through the main budget bill HB 2. (There is one exception to this, when the legislature provided $100,000 general fund appropriation for the previous 2023 biennium for potential litigation costs.) The Office of the Secretary of State administers one proprietary fund. Revenue is received from fees, such as those charged to businesses for corporate filings; state agencies for the use of administrative rules; and candidates filing for election. The SOS is projecting a small reduction in its overall budget (total for FY2024 and FY2025 of $12.9 million). Despite a significant expenditure in this past biennium in contract attorney fees for lawsuits challenging unconstitutional election-related legislation, the SOS is not requesting any state general fund dollars.   

Department of Revenue

For the Department of Revenue (DOR), the governor proposes an overall increase in funding of $9.1 million over the biennium, or 6.7 percent. This includes increases related to the statewide pay plan, benefit rate adjustments, the statewide vacancy savings rate of 2 percent, and inflation. 

New proposals within DOR include 1.0 FTE in the 2025 biennium due to the passage of the governor’s budget in the 2021 legislative session to help with tax policy implementation. The Liquor Control Division includes new proposals including overtime and temporary employees during peak periods, payout for employees leaving the department, and an additional 2.0 FTE to deal with the increased demand for alcoholic beverages. The cannabis control division transfers 1.5 FTE from DPHHS and requests an additional 0.5 FTE to implement HB 598 from the 2019 session, related to laboratory inspection and application review work (contingent on approval of legislation). 

Department of Labor and Industry

Overall, the governor is proposing a 2.8% increase to the Department of Labor and Industry budget in total funds. This is primarily a result of Present Law adjustments to personal services and fixed costs, offset by a reduction of nearly $4.5 million as a result of the elimination of 40.0 FTE within the Workforce Services Division. The budget notes the Department has gone through a review and has determined these positions (likely currently vacant) are no longer needed. The Department of Labor and Industry notably cuts $540,000 in funding for the HELP Link program, providing support and workforce training for individuals enrolled in Medicaid expansion HELP program. The Office of Community Services is requesting OTO funds for the required match for the ARPA funds granted from the federal government to engage more Montanans into Americorps. This request includes 1.0 FTE in FY 2024 and 0.5 FTE in FY 2025. 

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.