Montana lawmakers advanced a preliminary state budget last week that outlines $12 billion in spending over the next two years. It's expected to land on the House floor for debate in the coming days.
If nothing changes, the state will spend about $400 million more in the next biennium than it did over the last two years. That’s a 3.4% increase, according to the Legislative Fiscal Division. But the budget has only cleared one hurdle of many before it becomes law.
The House Appropriations Committee put its stamp of approval on the first draft of the budget with both bipartisan support and opposition.Committee Chair Rep. Llew Jones, R-Conrad, said the process went fairly smoothly.
“You know, there wasn’t always agreement but I was very pleased. I thought the Committee behaved with grace, right? They were respectful of each other and there was not too many times that seemed to get very heated at all.”
This will be Montana’s first state budget under a Republican governor and GOP legislative majorities in almost two decades.So far, proposed spending plans from the two branches don’t quite square.
Lawmakers propose spending about 1.1% less — or about $52 million — than Republican Gov. Greg Gianforte asked for out of the state’s general fund.
The general fund is the largest pot of state revenue that lawmakers get to appropriate.
Legislative analysts say the estimated state earnings lawmakers can use to outline the budget are expected to grow in coming years. The Legislative Fiscal Division shows the state’s general fund bringing in 5% more — or about $105 million — than it did over the last biennium.
But the state’s spending plan is far from decided. Jones explained the state budget should hit the House floor Monday and is likely to be amended as it is debated there and then eventually the Senate.
There are still missing pieces that could add significant wrinkles to the budget.
Lawmakers have yet to debate the bill that’ll outline how the state will regulate recreational marijuana. Voters legalized marijuana for adults over 21 through Initiative 190 last year, which also established a 20% tax on its sales. The Bureau of Business & Economic Research at the University of Montana estimated in September that the tax would bring in between $40 to $50 million in state revenue.
And finally, the governor’s budget office projects Montana will see nearly $3 billion from the federal American Rescue Plan Act. Lawmakers need to decide how to spend roughly $1 billion of it.
Sen. Ryan Osmundson, R-Buffalo, said the state is still waiting to see how the federal government will try to guide spending of those dollars.
“I’m anxious to see what — and how quickly — they will adopt rules around some of this, too."
One federal stipulation is making it unclear whether lawmakers can implement the slew of tax cuts proposed by Gianforte. It says states can’t use any of the federal dollars to directly or indirectly offset a reduction in state revenue from tax cuts.
Gianforte was asked about the issue at a press conference this week.
"We’re still trying to get clarity on this," he said. "This is one of the problems, that things are moving quickly in Washington and here in the state," he said.
The draft state budget is moving onto the House floor after a few changes that saw significant debate.
About $500,000 was restored to the budget for two state health department positions that serve as liaisons for Tribes. The positions had been cut by Republican lawmakers on the Health and Human Services Subcommittee but were restored after a public outcry and support for the positions from Gianforte’s appointed health department director.
The House Appropriations Committee also voted down proposals from conservative Republicans to cut funding for Indigenous language preservation programs and student need-based aid for college.
Rep. John Fuller, R-Whitefish, brought those amendments and explained why he thinks the state needs to be more fiscally conservative.
“I just believe that this is unnecessary, a unwise appropriation of the taxpayers' funds," he said.
Much of the budget debate comes down to whether Republicans, and the party’s more conservative and moderate wings, agree with one another on how to spend the state’s money.
Democrats are outnumbered in both chambers of the Legislature, making it impossible for them to advance policies without bipartisan support.
Senate Minority Leader Jill Cohenour said her caucus will likely look to amend the budget to add more funding for social safety net programs when it reaches the Senate for consideration.
“It’s really going to be about strengthening a lot of those programs that have been lifesavers for Montanans, right?" Cohenour said. "We want to basically strengthen the ability to succeed in this economy.”
Lawmakers are expected to start making decisions Friday on how to spend their federal allocation.
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