Following the governor’s State of the State address and the response by the speaker of the House, the media reported on the stark differences the two made regarding Montana’s fiscal condition. However, the more important point that needs to be made is an explanation of the underlying factors contributing to these views and our differing paths forward.
There are two primary measures for fiscal soundness. The first is structural balance, meaning that projected revenues must be higher than projected expenditures. Something every household and small business is familiar with. The second is ending fund balance, which should reflect the amount of money needed to meet the obligations of the state. It was clear to us by mid-2016 that the ending fund balance would be gone by the time the Legislature came to town January 2017.
Republicans warned the governor via a letter dated Sept. 4, 2016, that our state budget was heading into dangerous territory, and that he had time to take action to correct the budget and reduce spending. The warnings were ignored and the Republican-led Legislature is working to weather the current crisis and focused on a plan to get back in balance and ensure fiscal soundness in the long-term.
There are major problems with the governor’s proposed budget: 1. it imposes new taxes on sick people, on people who are trying to quit smoking and on small businesses and entrepreneurs; 2. it proposes taking money from funds intended to cleanup and prevent forest fire damage, provide emergency services via 9-1-1, and provide maintenance to critical infrastructure; 3. it adds new programs that will require ongoing funding into a future which is fiscally uncertain, and; 4. it leaves us with the same ineffective ending fund process for handling future budget crises.
Alternatively, the Republican plan for working through the current budget crisis reduces current spending by $33 million and future spending projected in 2018/2019 by $120 million, and does not approve costly new programs our state can’t afford. This plan provides a budget that will be structurally sound, will provide an operating reserve sufficient to meet the state’s obligations, and does not threaten budget stability into an uncertain economic future.
This process is familiar to every family and small business across the state. When a budget is out of balance, drastic changes need to be made.
The governor believes Montana has a short-term economic problem that can be endured with quick fixes and creative transfers. But simply put, he is kicking the can down the road. Current policies will leave the state in a static or worse economic position.
In a recently released economic report, Governor Bullock’s view of Montana’s economic outlook was again called into question. Montanans are earning wages among the lowest in the nation, which drives more Montanans into the arms of welfare programs that further drain our budget resources.
Republican legislators believe that Montana’s economic outlook, based on current policies, demands a budget strategy that achieves structural balance and provides an adequate operational reserve to meet the state’s obligations by restricting growth of existing programs, inhibiting new programs, and providing a process for budget stabilization to be used in times of economic uncertainty.