As the Montana Legislature’s special session entered its second day, talks continued Wednesday on final details of a plan to fill a $227 million hole in the state budget -- while most lawmakers simply waited around for the puzzle pieces to hit the floor.
Majority Republicans outlined their plan Tuesday night, including money from a private prison account, nearly $100 million in budget transfers and $76 million in spending cuts identified by Democratic Gov. Steve Bullock.
But sources told MTN News Wednesday morning that $40 million to $45 million of the deficit remain unresolved – and could be filled with a combination of tax increases or other actions.
House Speaker Austin Knudsen, R-Culbertson, also told MTN News Tuesday night that most Republicans would prefer to balance the budget without raising taxes. Yet he acknowledged that many options remained in the mix, as GOP leaders and the governor’s office sought a final solution that could be approved.
“There are a lot of pieces out there, a lot of things still on the table that we’re still discussing,” he said. “But what I will say is that we are absolutely a unified Republican caucus, which has not always been the case before. …
“We’re hoping to get out of there without raising any taxes on the people of Montana.”
Tax proposals still alive include a $30 million charge on the investment holdings of the state workers’ compensation fund and $12 million from expansion of a health-insurance premium tax, to a pair of smaller nonprofit insurers.
Both tax bills had been scheduled for action in the Senate Wednesday morning, but senators hadn’t met by noon, as budget talks continued among key lawmakers and the governor’s office.
Senate Majority Leader Fred Thomas, R-Stevensville, said Tuesday night that the GOP plan rests primarily on a pair of bills heard late Tuesday in committee.
“The Legislature is doing an awesome job to put together the pieces to solve this budget,” Thomas told MTN News Tuesday evening.
One of the bills increases the amount of transfers used to balance the budget and the other one – Senate Bill 9 -- directs money from the private-prison account and outlines other possible fixes – depending on what happens to various tax bills.
SB9 also would allow Bullock to use some of the private-prison money – at least $17 million, and maybe more – to offset some of the budget cuts. Neither bill had emerged from committee late Wednesday morning.
Bullock called the special session of the Legislature to balance the state’s budget. It began mid-day Tuesday.
Lawmakers and Bullock are working to fill a budget hole caused by firefighting-cost overruns this summer and less-than-expected tax revenue.
Bullock’s office has yet to comment on the GOP plan.
Minority Democrats in the Legislature, however, said Tuesday night they’re dismayed by the GOP’s plan to use money from the private prison account – which would entail extending a state contract for the owner of the private prison at Shelby beyond 2019.
“We are kind of boxed in right now,” Rep. Kelly McCarthy, D-Billings, told fellow Democrats at a meeting late Tuesday night. “So we’ll have to wear the private prison, is what they’re forcing on us right now. Because without it, we don’t get the transfers. And without the transfers, there’s $90 million more in cuts that are going to have to come out of services that people of Montana depend on.”
Bullock took care of part of the budget shortfall himself Tuesday, announcing he would put into place about $76 million in spending cuts during the current two-year budget period.
Then, later Tuesday, GOP leaders unveiled its two major bills: SB9, sponsored by Sen. Llew Jones, R-Conrad, and House Bill 6, from Rep. Nancy Ballance, R-Hamilton. The bills would fill much of the remaining budget hole with the following elements:
CoreCivic has about $32 million of state money in account, set aside for purchase of the private prison. However, the company has said it will release the money back to the state if the company gets an extension on its contract to operate the prison. Its current contract expires in 2019.
The exact amount of the transfers wasn’t immediately clear, although comments from The total amount of transfers from HB6 and other measures could reach $100 million.
Thomas and Senate President Scott Sales, R-Bozeman, said Republicans also plan to make Bullock’s proposed spending cuts permanent – but give him the ability to mitigate those cuts if state tax revenue comes in higher than expected in the coming year-and-a-half.
Sales and Thomas said legislative Republicans, who control majorities in both houses of the Legislature, have drawn on the ideas of many GOP members for the plan.
“It’s been spread across the board,” Sales said. “It’s a good collaborative effort.”