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Request to return state dollars an early test in budget process

Legislative Fiscal Division

Montana’s cash cushion has grown smaller since the 2015 Legislative session largely because of declining revenue from natural resource extraction and lower tax collections.

That’s why lawmakers are summoning state agencies to see if they would make spending cuts in their current budgets to help Montana’s ailing “checkbook.”

“We’re asking the agencies to step up and help us find some dollars to deal with this current cash flow crisis,” says Senate Finance and Claims Chair Llew Jones, a Republican from Conrad.

Jones predicts carrying out the Constitutional mandate to pass a balanced budget will be the most challenging since 2003.

"And it will not be pleasant," he says. "There's going to be belt tightening going on across all agencies as we look to deal with a revenue shortfall that's caused us to have operational reserve problems."

Jones notes cash-on-hand has dropped since lawmakers adjourned in April 2015. He says states can't look to the federal government for a bailout - or "stimulus" - as was the case during the recent so-called "Great Recession."

"I'm not going to say 'The sky is falling,'" he says. "I'm going to say it's downright unpleasant."

Jones predicts the hallways of the Capitol will be filled with folks saying, "...their sky is falling."

As in incentive for agencies to voluntarily participate in returning money from their current budgets,  Jones says they will be assured they would get some of their budget back for Fiscal Year 2019.

“If they do not do this then they will not have the opportunity to have their base increased in 2019,” says Jones. “So it’s both a carrot and a stick.”

The state agencies will present before a joint meeting of the House and Senate committees charged with crafting the state budget.

“What we’re expecting is that they’ll either come in and say, ‘we have nothing to give you’ or ‘we’ve looked and we have $20,000 to give you,’” says House Appropriations Chair Nancy Ballance of Hamilton.

Both Ballance and Jones think the state could gain between $20-30 million if the agencies voluntarily offer up reductions in their current budgets.

But will they?

“What the legislature is doing is coming in with a hatchet as opposed to a scalpel to try to fix a one time revenue glitch in Fiscal 2016 as we’re projecting strong growth in the next 2 years,” says Dan Villa, the Bullock Administration’s budget director. Villa defends the governor's budget as fiscally sound and responsible.

“We will absolutely cooperate,” he says when pressed numerous times over whether the state agencies will offer up money from their current budgets.

“We’ll make sure the Legislature understands the cuts that we have proposed and the ramifications of their irresponsible and unnecessary cuts,” Villa says.

Here’s this week’s schedule:

  • Jan 4, 2017 - a joint meeting of the House Appropriations and Senate Finance and Claims Committee, Room 317, 8:00 AM.
  • Jan 4, 2017 - House Appropriations Committee will hold a hearing on House Bill 3 (the vehicle to accept any returned money from state agencies) in Room 102 at 3:00 PM.
  • Jan 5, 2017 - House Appropriations and Senate Finance and Claims will hold a joint work session on House Bill 3 in Room 317 at 8:00 AM. Testimony will be taken from the state agencies in the following order:

Section A:

  1. Legislative Branch
  2. Governor’s Office
  3. Commissioner of Political Practices
  4. Department of Revenue
  5. Department of Administration
  6. Department of Commerce
  7. Department of Labor and Industry
  8. Department of Military Affairs

Section B:

Department of Public Health and Human Services

  1. Medicaid
  2. non-Medicaid

Section C:

  1. Department of Fish, Wildlife and Parks (2017 OTO)
  2. Department of Environmental Quality
  3. Department of Livestock
  4. Department of Natural Resources and Conservation
  5. Department of Agriculture

Section D:

  1. Judicial Branch
  2. Montana Board of Crime Control
  3. Department of Justice
  4. Office of Public Defender
  5. Department of Corrections

Section E:

  1. Office of Public Instruction
  2. Board of Public Education
  3. Commissioner of Higher Education
  4. Montana School for the Deaf and Blind
  5. Montana Arts Council
  6. Montana State Library
  7. Montana Historical Society

The following agencies not required to testify because they don’t have a direct general fund impact: Consumer Council, Secretary of State, State Auditor, Department of Transportation, and the Public Service Commission.