Governor's budget proposals heard during special session

HELENA — State agencies and their supporters begrudgingly accepted budget cuts proposed by Gov. Steve Bullock as part of the state’s response to a projected $227 million budget deficit.

Proposals to raise taxes and fees, however, met with more resistance.

Montana lawmakers held committee meetings Monday ahead of a special session that seeks to account for the budget shortfall.

The Montana School Boards Association, School Administrators of Montana and the MEA-MFT — the union that represents school employees — supported a bill that would eliminate $14.9 million in education block grants between January 2018 and June 2019.

Kirk Miller, SAM executive director, said Monday the proposal was the way kindergarten through 12th grade funding would help with the budget shortfall caused by an unexpected fire season and less state revenue than lawmakers projected.

In another bill, schools statewide would take an $8.2 million hit from their facilities and technology fund, while $8 million in highway funding would revert back to the general fund along with $2 million from the capitol complex maintenance account.

A bill to charge a fire assessment on most privately owned rural land to fund Department of Natural Resources and Conservation firefighting efforts didn’t face too much argument before the joint House Appropriation-Senate Finance and Claims committee.

However, legislation that proposes a 3 percent fee for state management on Montana State Fund reserves above $1 billion was opposed by the office of State Auditor Matt Rosendale.

Deputy Insurance Commissioner Bob Biskupiak said the money came from policyholders and should stay with policyholders, Lee Newspapers of Montana reported.

Sen. Ed Buttrey, R-Great Falls, argued it was a good short-term policy solution that would not hurt the state fund’s bottom line, generate about $30 million and prevent difficult cuts.

Business owners also objected to proposed increases in lodging and car rental taxes, questioning why their businesses were being singled out to bring in an estimated $66 million through December 2019.

Revenue Director Mike Kadas said the governor is proposing doubling the lodging tax to 6 percent and increasing the rental car tax from 4 percent to 10 percent because the increases would have little effect on Montanans and be easy to implement.

Bridger Mahlum with the Montana Chamber of Commerce suggested a 1 percent tax increase might be more palatable, but that online companies like Airbnb should also be required to pay the lodging tax.

Bullock on Monday requested a bill draft to address that issue.

Sen. Jeff Essman, R-Billings, asked Kadas whether federal tax changes might lead to an increase in state tax revenue “before this cataclysm is supposed to occur.”

Kadas countered that the $227 million shortfall is “quite real and a very reasonable estimate of what the consequences are going to be.”

Even if federal tax laws are changed, they wouldn’t take effect until 2018, which means any changes to state revenue wouldn’t be fully seen until April 2019, near the end of the current two-year budget, Kadas said.

Home health care providers and advocates for senior citizens supported the tax increases and budget cuts, saying they were a better solution than cutting essential services for some of the state’s most vulnerable citizens.

The committees did not vote on any legislation on Monday.

Republican lawmakers have enough votes to expand the scope of the session and are expected to seek more legislation, including a bill that would tap $30 million in money set aside in case the state wants to buy a private prison in Shelby. The company with the management contract said it would turn over the money in exchange for a 10-year contract extension.

Hearings resume Tuesday morning with the session expected to start Tuesday afternoon.