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Montana lawmakers facing big budget questions in wake of pandemic

Posted at 6:51 PM, Apr 24, 2020
and last updated 2020-04-24 20:51:52-04

As the impact of the coronavirus pandemic ripples through Montana's economy, the costs pile up as revenue dries up.

That one-two punch has state officials nervously looking at the state budget, trying to anticipate what shape it will be in one month, two months and six months down the road.

"I don't think, today, we have any idea how big a financial hit this is going to be," said state Rep. Bill Mercer of Billings, a member of the Legislative Finance Committee.

The short answer, according to Mercer, is the budget looks good right now, with budget receipts in Helena actually running a bit ahead of projections in the current fiscal year. But look out ahead.

"There will be a substantial hit to the corporate tax number, the individual income tax number, and then things like the gas tax, the lodging tax and probably other things I'm not including," said Mercer. "So there is real concern about where we will be, once we get into the balance of this year and fiscal year (20)21."

News that Montana has $1.25 billion to spend out of Congress' coronavirus relief fund promises some relief, but Mercer cautions that there are strict guidelines on how that money can be used.

"My biggest concern right now is the sense that there may be a groundswell in the state, saying that's a lot of money we can do a lot of things with it," Mercer said. "The reality is this has got to be a necessary expenditure tied directly to the pandemic. There is just not discretion beyond that."

Billings businessman Scott Brown is among five small business owners appointed to Gov. Steve Bullock's coronavirus task force, which is helping determine where those federal dollars can best be spent.

"The guidelines from the feds are much more strict than we originally thought," said Brown. "The funds we get from the CARES Act are strictly to be used for mitigating impacts from the coronavirus. It's not the economic stimulus bill we had hoped for, but still the money will do a lot of good for the state."

Brown said he's trying to develop a small business relief fund to help business owners who have yet to get any federal aid.

"There are a lot of businesses not only impacted now, but who will be impacted into the future," said Brown. "We're trying to come up with some sort of safety net to keep those small businesses afloat."

Perhaps the biggest questions for lawmakers such as Mercer, and small business owners like Brown: How long will the pandemic and the downturn last? When will the public feel comfortable shopping and traveling again ?

"I think I'm more pessimistic now than I was a couple of weeks ago," said Brown. "Now, people are talking about maybe next spring, somewhat getting back to normal, maybe even after that."

As for the long term state budget picture, Mercer said it will take some time to come into focus.

"We'll be looking at the number of unemployment insurance claims and then translating that into what that will mean in terms of other costs to the state and loss of revenue," said Mercer. "It could be a very difficult financial environment for the state, and that's why we have to be pretty vigilant in this period leading up to the 2021 Legislature."

The coronavirus task force is due to deliver its recommendations to Bullock by the end of end of next week. Visit the state'sCOVID-19 page for information on submitting ideas to the task force.