Legislature reaches budget fix without raising taxes

HELENA — Montana lawmakers have agreed to a plan to address the state’s projected $227 million budget deficit without raising taxes in a complicated mix of interconnected bills that make it nearly impossible for the governor to reject any part of the plan without further cuts.

The largest objectionable piece for Gov. Steve Bullock creates a fund to manage about $30 million in proceeds if the governor negotiates an agreement to extend for 10 years the contract of CoreCivic, which manages a private prison in Shelby.

“We can’t negotiate a prison contract,” House Speaker Austin Knudsen said before the special session began. “But we can incentivize the governor to take a look.”

If the governor does not place $15 million of that money in the state fire fund by next June, the bill triggers further reductions to state agencies already reeling from cuts made due to lower-than-expected revenues and a devastating fire season, said Rep. Rob Cook, R-Conrad, whose district houses the prison.

Lawmakers passed a bill late in the regular session that triggered $97 million in spending cuts as revenues lagged. The governor implemented another $76.6 million in cuts Tuesday as the special session began.

Should the state’s finances improve, the prison bill sets terms for saving some of the money and reversing some of the cuts and transfers.

“Frankly, we’ve given the governor all the tools he needs now to fix this crisis he says he has,” Knudsen said early Thursday after the House adjourned. “We’ve given him $230 million worth of options.”

Democrats argued that the Legislature should not be dictating the governor’s actions with regard to a state contract, much less threatening further cuts to services for vulnerable citizens. Montana’s contract with CoreCivic includes setting aside money that could be used toward purchasing the prison when the contract ends in 2019. If the state does not renew the contract, the money would go to CoreCivic.

“The solution before us is far from perfect, but it allows us to avoid hundreds of millions of dollars in unacceptable cuts that would hurt people across our state,” House Democratic Leader Jenny Eck of Helena said in a statement.

The budget package lawmakers approved includes $94 million in transfers and other savings, about $20 million more than the governor initially proposed.

“Tonight we reached a reasonable and responsible compromise to balance our budget and pay for Montana’s record fire season,” Bullock said in a statement. “While I’m disappointed we were not able to reach a full agreement, I would be remiss not to acknowledge all the progress made to minimize the impacts of severe budget cuts on the most vulnerable among us.”

House Appropriations Chairwoman Nancy Ballance said lawmakers and the administration negotiated additional transfers that were allowable, reasonable and not harmful.

OTHER ACTIONS

— Lawmakers passed a bill that would temporarily charge a 3 percent management fee on Montana State Fund assets above $1 billion, expected to bring in nearly $30 million.

— Both houses approved bills proposed by the governor to withhold $8.2 million in block grants to schools, withhold payments into the state employee health plan for two months to save $10.4 million and to withhold state payments from the judge’s retirement system through July 2019 to save $2.8 million. Those amounts are included in the $94 million in transfers and delays.

— Lawmakers also sent the governor a bill that calls for $15 million in employee cuts that can be made by furloughing workers who make more than $50,000 annually. Democrats spoke emotionally against the bill, saying it amounted to further cuts in services to state residents.