Lawmakers strike late-night budget deal

The Montana Legislature’s 33rd special session ended before dawn Thursday, with lawmakers closing the state’s $230 million budget gap with several interlocking bills – but no new taxes.

“It’s...a minor miracle that it all came together,” State Sen. Bob Keenan, R–Bigfork, told the Daily Inter Lake Thursday. “There were multiple times, even yesterday, when I thought we’d be taking a recess through Thanksgiving.”

But the four nights Keenan booked at a Helena hotel proved sufficient, and in the Flathead Valley, Republican and Democratic lawmakers shared his relief that the job is done. However, disagreements about the final product linger.

Gov. Steve Bullock had initially proposed about $75 million each in budget cuts, tax increases and transfers from specific state accounts into the general and firefighting funds. He made the cuts Tuesday; on Wednesday, the Legislature made them permanent by passing House Bill 2.

Proposals to boost revenue by temporarily raising rental car and hotel taxes fell by the wayside, as lawmakers instead focused specific state accounts.

House Bill 6 transferred money from these cash pools into the general fund. These and other measures, like auctioning off more liquor licenses and authorizing state employee furloughs, narrowed the gap by another $94 million. Another $30 million was found by charging a management fee for state investment portfolios worth more than $1 billion.

Together, these bills leave Montana $30 million away from a balanced budget. Senate Bill 9 aims to cover the rest by requiring up to $15 million provided by private prison operators to be deposited in the fire fund, and allowing the rest to fund essential services.

This bill, which cleared the House and Senate, aims to capture an offer by private prison operator CoreCivic, which operates Shelby’s Crossroads Correctional Facility, to give the state $30 million in exchange for extending its contract by 10 years.

Many Democrats, including Bullock, opposed the deal. The American Civil Liberties Union of Montana’s Caitlin Borgmann has accused CoreCivic (formerly Corrections Corporations of America) with poor transparency and human rights violations.

As Keenan saw it, these problems were “not unique to private prisons,” and that opponents were driven by “a base ideological mistrust of the word ‘private.’”

But Rep. Dave Fern, D-Whitefish, voted against SB 9. He considered this clincher to the budget deal “governance not at its best.”

“I didn’t have very much time to really get very many facts and figures,” he said.

“I’m not saying I would have been opposed to it if I had a chance to look at it more closely,” Fern explained. But “usually, big important issues go through some kind of time test of vetting,” one that enables lawmakers to weigh the pros and cons.

Even so, he concedes that “The bill was pretty cleverly written, so to some degree it forced the hand” of the Governor.

Bullock tried to strike a positive note as the bills headed to his desk, tweeting that “while we still have work to do, Montanans can be pleased.”

One group with work to do is local school districts. One cost-cutting bill the Legislature passed, Senate Bill 2, eliminated the state’s school district and countywide school transportation block grants, a move that the Great Falls Tribune reports will save $14.9 million per year.

“If we don’t have that revenue source, then the only other place that we can get it is from property taxes,” said Danelle Reisch, business director for the Whitefish School District. She pointed out that “we’re obligated to provide transportation to get our kids to school.”

Area Republicans differed on how the budget crisis could affect local school districts. While Keenan conceded that property-tax increases are “a very real possibility,” Rep. Mike Cuffe, R-Eureka, said that “my understanding is that there is not going to be a significant increase in property taxes.”

And Rep. Derek Skees, R-Kalispell, told the Daily Inter Lake that “Republicans are not for any tax increases and are not for anything that defers costs to local government.”

Presented with Resich’s statement, he stressed that “this is not gonna be a problem brought to her by the Republican-led Legislature in Helena.” he predicted that Bullock would bear the responsibility for any cuts that affect vital services.

Skees echoed a common Republican refrain: that Bullock has targeted budget cuts at the most vulnerable, rather than at the state’s bureaucracy.

“He prioritized those cuts differently than I would have,” Keenan said.

But Representative Fern noted that the cut proposals were submitted by state agency heads.

“I’m not really sure why it would be [in] the governor’s or the budget director’s or the department head’s interest...to have purposefully picked budget cuts that would hurt those who need the programs or funding most.”

Before the special session, Fern told the Daily Inter Lake that, however events turned out, he and his colleagues needed to continue considering new sources of revenue, like tourism, e-commerce, and other key sectors of the state’s economy.

On Thursday, he stood by that assessment.

“What we approved most likely establishes a fairly low base budget when we come back in 2019. It means we’re going to start off with all the cuts implemented,” he said.

“If you think we need to restore some of these cuts, then we’ve got a way to go.”

Reporter Patrick Reilly can be reached at preilly@dailyinterlake.com, or at 758-4407.