Legislature adjourns after passing key money bills

Senate President Bob Story brings the gavel down to adjourn the 2009 Legislature. (Photo by Molly Priddy)

By MOLLY PRIDDY
Community News Service
UM School of Journalism

HELENA – With snow falling outside, the final gavel fell on Montana’s 61st Legislature Tuesday, as lawmakers gave final approval to the state budget, the federal stimulus plan and a bill that seeks to lessen the financial blow to taxpayers from the state’s recent property appraisal.

Republicans and Democrats fought this session over funding for children’s health care and K-12 schools, but legislative leadership said the level of civility this session allowed for more compromise than the last session.

“We did have a good working relationship between the Senate and the House and between the Republican and Democrat caucuses,” said Senate President Bob Story, R-Park City.

Both parties said they stuck to their priorities throughout the session, with Republicans pushing for less state spending and Democrats promoting more state funding of children’s health insurance and education.

“I think overall we have done the people’s business,” said Sen. Carol Williams, D-Missoula.

House Bill 2, the state budget, will fully fund the Healthy Montana Kids Plan, a voter-approved expansion of children’s health insurance funded by the state. The budget will also give K-12 education a 3 percent increase in funding with help next year from federal dollars.

Democrats demanded the full expansion for children’s health care and more school funding for most of the session, but Republicans argued the state did not have enough money to pay for a new program and still maintain state agencies.

In another effort to reduce state spending, Senate Republicans cut 2 percent from all state agency budgets, a move that left a bad taste in some Democratic mouths.

“This specifically targets jobs in state agencies,” said Sen. Christine Kaufmann, D-Helena.

The Senate voted 27-23 to approve the latest version of the budget, but several senators expressed reservations about overspending.

“I’m flabbergasted that this is what we call an austere budget,” said Sen. Joe Balyeat, R-Bozeman, after describing over $10 billion of spending, including federal stimulus dollars.

Sen. Jim Shockley, R-Victor, said revenues will probably not bounce back as quickly as the budget suggests, and Montana will be in a hole. “This (budget) is a compromise, but it won’t work,” he said.

The Senate’s budget chairman, Sen. Keith Bales, R-Otter, stood behind the budget he and his committee crafted, but also expressed doubts about avoiding a special session.

“I don’t know that we could’ve crafted a budget in these uncertain times (in which) everybody could’ve gotten what they wanted,” Bales said.

Some Senate Democrats voted against the budget because it temporarily reroutes funding earmarked by voters for the Healthy Montana Kids Plan into the general fund. They also disagreed with removing an amendment that would allow the Children’s Health Insurance Program to pay for contraceptives.

“In 2009, to be standing here trying to beg and plead about having contraception being taken care of so children will have a healthy opportunities ahead of them instead of unplanned pregnancy is just beyond my recognition of where we are as a people,” said Senate Minority Leader Carol Williams, D-Missoula.

Sen. John Brueggeman also favored CHIP-funded contraceptives as a means of avoiding future abortions.

“I wish that everyone was living biblically moral lives,” Brueggeman said. “I wish that was the case but it is not.” He told Republicans that more abortions would happen because women could not access birth control.

“We all have to be clear with that,” Brueggeman said. “We all have to sleep with that.”

The House voted 56-44 to pass the budget with little discussion. House Appropriations Chairman Jon Sesso, D-Butte, said he worked with Republicans to craft an austere and prudent budget that also pays for children’s health care and education.

“I’m proud of the package that we present to you today,” Sesso said. “It’s a budget (that) we can say without a doubt is fiscally responsible.”

But the House would not stay quiet for long. The bill that seeks to lessen the sting of higher property taxes after reappraisal, House Bill 658, was hotly debated as several Democrats split with their leadership to denounce the bill.

Rep. Mike Jopek, D-Whitefish, said the bill does not provide enough money to ease tax increases, saying some homeowners could be faced with 15 percent tax increases with little help for elderly or low-income residents. Rep. Dick Barrett, D-Missoula, agreeing with Jopek, said the bill forces the poor to pay more of their wages toward property taxes than the wealthy.

But House Speaker Bob Bergren, D-Havre, said the bill needed to pass before the end of the day or a special session would have to be called.

“Right now, this is the best we can hammer out,” Bergren said. He said that if there were problems, the next session could adjust tax rates.

The bill passed with a 57-43 vote.

The 2007 session was plagued with bipartisan acrimony over spending a $1 billion surplus, which led to the Legislature’s failure to complete its one constitutional duty in a regular session: constructing a state budget.

Current lawmakers said they entered the 2009 session with that lesson learned. They said they were proud of the civility and openness between both houses and parties.

Before any of the work can officially be deemed complete, the bills have to be signed into law by Gov. Brian Schweitzer. The governor said he has yet to look over the details in the budget and stimulus bills but hopes to avoid a special session to deal with any discrepancies.

“I’m pleased with the work of the Legislature,” he said. “This wasn’t an easy session for anyone. Let us hope that there isn’t something that we left behind.”

But Schweitzer also said he was not pleased with the work done on property-tax reappraisal mitigation because it gave too many breaks to subdivision owners and businesses.

The governor also said universities should be able to mitigate tuition increases despite cuts made to their budgets in HB 2.

“I would encourage the Board of Regents to cap tuition for another two years,” Schweitzer said.

Since fewer than 100 legislators voted in favor of the budget, Schweitzer retains the power to veto individual aspects of the bill. The governor would not say if this was a choreographed effort by Democrats, but did say there is always communication between his staff and Democratic legislators.

Bergren said there was talk about ensuring Schweitzer’s line-item veto power, but nothing official.

“There were some discussions in the hall, but there was no coordinated effort,” Bergren said.

Barring special session, the next Legislature will meet in 2011.

Legislative leaders announce deal on K-12, CHIP

By MOLLY PRIDDY
Community News Service
UM School of Journalism

HELENA – After a long night of deliberation, the Legislature's Democratic and Republican leaders announced Saturday morning that they had reached a budget compromise that would increase spending on K-12 schools and fully fund the voter-approved Healthy Montana Kids Plan.

Both parties said they compromised their priorities to get a workable budget for the next two years.

“It’s not as much as I would have hoped, but apparently it’s more than what other people would have wanted,” said House Appropriations Chairman Jon Sesso, D-Butte.

His Senate counterpart, Sen. Keith Bales, R-Otter, said the compromise would keep the budget relatively stable, but less so than he would have liked.

“I don’t think anybody got exactly what they wanted, but it’s a budget we can all live with and I hope it’s a budget we can get through the biennium (with) without having to come back,” Bales said.

Throughout the session, Democrats demanded a full expansion of the voter-approved children’s health care program. But Senate Republicans reduced the eligibility threshold because they said the program was too expensive during a recession. But Democrats accused Republicans of bucking the voters' will.

Now, both Democrats and Republicans have agreed to begin implementing the full expansion by October. However, Republicans did get something out of the deal.

When voters approved the program in the November elections, a special bank account was set up to fund the expansion. Part of the initiative said that money could not be used for anything except health insurance for children of low- and moderate-income families. Republicans worked during the session to change that law, allowing some of money to be transferred to the state checkbook for general programs.

The latest budget compromise allows half of the money in the special revenue account to be switched to the general fund. On Friday, Sesso said the expansion could still happen with less money because the program won't be at full capacity for two years anyway. Leadership said the transfer will not be permanent, and the money will be returned in four years.

Sesso said the money that would have gone into the account to help pay for budget cuts in the Department of Health and Human Services and help build a $250 million cushion for the next two years in case the economy continues to tank.

The money would also ensure another Republican priority: ensuring that state will not spend more money than it earns in the next two years.

“We trust when we’re done (we would) leave our ending fund balance at the end of 2011 to be in excess of $250 (million), and to have structural balance near zero for the second year of the biennium,” Sesso said.

But Senate Minority Leader Carol Williams, D-Missoula, expressed her disappointment at the compromise on Healthy Montana Kids. Though she was “very happy” the committee decided to give health insurance coverage to 30,000 children, she said she was troubled by the change in the funding mechanism.

“It’s kind of bizarre,” Williams said. “It’s a weird way to end the weekend.”

Education funding, another contentious issue, would also received an increase from state funds. Sesso said the state would fund a 1 percent increase in K-12 base funding and a 1 percent increase in the payment per child, with 2 percent increases the next year funded by with federal stimulus money. The following year, the state would fund 3 percent increases in both categories.

Despite the announced compromise, the governor’s budget director, David Ewer, said the executive branch could not sign off on the deal because it had yet to be included in the discussion.

“The governor’s office has not digested the proposal,” Ewer said. “I hope that’s a helpful comment – it’s reality.”

Rep. Llew Jones, R-Conrad, a member of the budget conference committee that worked out the deal, commended Sesso and Bales on their ability to compromise in the final days of the session.

“You have both adequately displayed that you’re willing to make each other bleed for your philosophies,” Jones said. “I thank you for making each other bleed but nobody bled to death.”

The exact details of the compromise were still being hammered out Saturday and were not expected to be written up and vetted until Monday morning when the committee reconvenes to take final action on the changes.

Governor blasts GOP budget and stimulus plans

By MOLLY PRIDDY
Community News Service
UM School of Journalism

HELENA – As bills to spend billions of state and federal tax dollars work their way through Legislature’s final days, Gov. Brian Schweitzer is making it clear that he’s not pleased with what he sees heading his way.

“This session, if it ended today, would be less successful than the last legislative session,” Schweitzer said in an interview this week. “The major funding bills are not anywhere close to a condition where we could support them.”

The governor is especially miffed with Senate Republicans who reduced funding for a voter-approved program to expand health coverage for another 30,000 uninsured Montana children. Their plan would add cover about 15,000 additional children. Nor is he happy with the GOP plan to spend less ongoing state money on K-12 schools.

But if you really want to set him off, ask him what he thinks of GOP’s plan to dole out nearly $800 million in federal stimulus dollars provided in the Obama administration’s Recovery Act.

“The money that is contained in (that bill), violates the principal of the Recovery Act, and we would run a very high risk of being forced to send the money back to Washington, D.C.,” Schweitzer said. “There is an inadequate investment in education and health care.”

Senate Republicans fired back, saying the criticism comes from an absent governor who did not offer suggestions about how to solve problems earlier in the session. They also said their amendments to the bill fund both health care and education responsibly, given the recession.

“Education is funded at the level he funded it at in his budget,” said Senate President Bob Story, R-Park City.

That’s technically true, but the clash over of how Democrats and Republicans want to fund schools has implications for the future.

Schweitzer’s proposed budget would give school districts a 3 percent increase in ongoing state money for their base budgets and 3 percent increase for per student payments. That money would be a permanent increase, unless some future Legislature votes to cut it.

But Senate Republicans fear that if the economy doesn’t improve and state tax coffers shrink over the next two years, lawmakers could be forced to either slash school funding or raise taxes, something neither party wants to do.

The GOP solution is to give school districts the same amount as the governor proposed but with one important difference: The bulk of it would come from one-time federal stimulus money – money that won’t be there in two years.

That means that if the economy doesn’t improve, schools had better start looking for ways to cut their budgets. Senate Majority Leader Jim Peterson, R-Buffalo, said the GOP plan gives schools time to consider changes, if necessary.

“We’re not underfunding education,” Peterson said. “The only debated issue is where should the base (increases) be two years from now.”

Another simmering feud between Schweitzer and GOP leaders is over the doling out federal stimulus dollars to cities and counties for “shovel-ready” infrastructure projects, such as road and bridge work.

The governor wants legislation that spells out each single project. Senate Republican want to give local governments block grants so they can decide how to best spend the money.

Story said the change was made to protect the money so Schweitzer could not pick and choose which project to veto when it’s time to sign the stimulus bill.

That’s “ridiculous,” Schweitzer said during Wednesday’s interview. To make his point, he produced a 60-plus page copy of the main budget bill, tossed it on the table and began pointing out various line items and their costs. That system allows for transparency, Schweitzer said.

“This is the way we appropriate money in Montana,” Schweitzer said. “The Recovery Act is not going to allow states to just shovel money out of a window in the dark of night and I, as the governor who signed the letter accepting responsible for these recovery dollars, will not sign such a bill.”

As one of the few states in the country not facing billions in deficits, Schweitzer said mistreatment of federal dollars could put Montana’s relatively sound economy at risk.

“I’m not going to allow a few members of the Legislature to put Montana in a difficult situation,” he said.

But Peterson and Story said the governor is wrong in his concern about transparency. Any city or county applying for the money would have to go through the Department of Commerce, Peterson said, a function of the governor’s office.

“This is a better way,” Peterson said. “You can see that it’s even more transparent.”

Budget matters aren’t the governor’s only concerns as the Legislature heads down the homestretch. He’s also frustrated with Republicans who blocked his bill to set govern “carbon sequestration,” a fledgling technology to capture and store underground the carbon dioxide emitted by coal-fired power plants.

Republican Sen. Keith Bales, R-Otter, drew Schweitzer’s anger after Bales sponsored the GOP version of a carbon sequestration bill. Both bills were tabled amid partisan differences centering on who would authorize permits and the state’s ultimate liability for any environmental damage the process might cause.

“He couldn’t answer questions about his own bill,” Schweitzer said of Bales.

The governor accused Republicans of purposefully bringing forward a bad sequestration bill, knowing full well it would die but earning credit for proposing it.

“These are the same cats that voted against the ‘clean and green’ tax policy that we had in the last legislative session that’s already brought about $1 billion worth of investment to Montana,” Schweitzer said.

Peterson disagreed with Schweitzer’s assessment of the sequestration bill.

“There’s nothing wrong with that bill,” Peterson said. “Sen. Bales worked hard on that bill.”

Peterson said the governor’s criticism stems from partisan differences, not content.

“In my mind, it’s all politics,” Peterson said. “The governor needs to govern with a window, not just with a mirror.”

Schweitzer did have some plaudits for Republicans who insisted, as he does, that the budget include a $250 million contingency or “rain day” fund, in case state revenues continue to tumble. Members of the governor’s own party want to spend some of that money now for a variety of projects and causes.

“I’m glad I’ve got ‘em broke in,” Schweitzer said of the Republicans. “I had to veto 19 bills to get my ending fund balance at the end of the last legislative session.”

Peterson and Story said a keeping a reserve at the end of the session makes sense because the economy is still struggling.

“That’s just good business,” Peterson said. “That’s calling a spade a spade.”

Budget and stimulus bills are bound for House-Senate conference committees, whose members are charged with seeking compromises. Story and Peterson predicted reasonable outcomes.

“I think in the end the governor hopefully will be pleased with it,” Peterson said.

House rejects GOP cuts, endorses budget bill

By MOLLY PRIDDY
Community News Service
UM School of Journalism

HELENA – After only a day’s debate, Montana’s House of Representatives passed a budget today, rejecting every Republican effort to whittle it down.

The House voted 65-34 to give its initial approval to House Bill 2, which would fund state government over the next biennium. The budget totals $8.1 billion in spending, a $474 million increase from the current budget.

Democrats praised the day’s work as a model of bipartisanship, while disappointed Republican leaders predicted the GOP-controlled Senate would have a better chance of making cuts.

House Speaker Bob Bergren, D-Havre, called the budgeting debate, which began on the floor at 9:30 a.m. and ended at 5:45 p.m., an unprecedented success.

“All 100 people in this chamber want what’s best for Montana,” Bergren said. “We just have a little bit different philosophies.”

A handful of Republicans joined all 50 House Democrats in beating back every proposed cut, despite forecasts late last week of another $41 million drop in projected revenues. In all, analyists have predicted revenue shortages of $290 million since just before this session begain.

The biggest sections of the budget - human services, corrections and public education - all received increases. Human services, accounting for $3.2 billion of the budget, saw a 9.4 percent increase from the last biennium. Public education, at $1.6 billion of the budget, will increase by over 3 percent. The prison system would see a 3 percent increase of $11 million.

The only budget area that saw an reduction was higher education, which will decrease by $5 million.

House Minority Leader Scott Sales, R-Bozeman, offered 21 of the 22 unsuccessful amendments to cut what he considered to be a too-fat budget. He also warned that the state can expect plenty of revenue drops in the future.

“Our nation and our state face serious times ahead,” Sales said. “You cannot spend your way into prosperity.”

Sales’ amendments included removing salary increases for attorneys in the Department of Justice, cutting $175,000 from the Montana Board of Crime Control, and cutting $250,000 from the Office of Public Instruction.

He also proposed cutting $1,300 over the next two years from the Board of Public Education budget for the per diem payments for board members.

“This would just prevent them from having a ham sandwich while they’re on the road,” Sales said. “They can pack a lunch.”

When that amendment failed 36-63, Sales expressed his disappointment. “We couldn’t find the resolve as a group of individuals to remove $1,300,” he said.

But House Appropriations Chairman Jon Sesso, D-Butte, said his committee put together a sound budget that prepares the state for lean times ahead.

“Montana is in the black, we’re not in the red,” Sesso said. “We’re not mortgaging our future to anyone.”

House Democrats held steady in opposing any cuts, while a handful of Republicans joined them for a variety of reasons.

Rep. Llew Jones, R-Conrad, said he didn’t support floor amendments out of respect for the Appropriations Committee, and because it can be dangerous to change a large budget bill without first researching repercussions.

Rep. Duane Ankney, R-Colstrip, said he voted to pass HB 2 and send it to the Senate, where Republicans have the votes to make cuts.

“This bill will go to the Senate where all your concerns will be addressed,” Ankney told fellow Republicans. “This is not the place to do that.”

But Rep. Tom McGillvray, R-Billings, compared state spending to that of General Motors, the auto maker now seeking a government bailout.

“You can’t continue to spend money you don’t have forever,” McGillvray said. “We’re running ourselves into a hole.”

The most heavily debated section of the budget concerned the state’s Department of Health and Human Services, with issues ranging from children’s health care to state-funded contraception.

McGillvray tried but failed to cut funding for the Healthy Montana Kids Plan, the program approved by voters last fall to provide heath insurance to nearly 30,000 uninsured children from low- and moderate-income families.

The coverage would be paid for through the CHIP and Medicaid programs, in which the federal government matches state funding.

“Certainly, most voters out there that I talked to had no idea what was really happening there,” McGillvray said. “This is not poverty at all. We’ve gone way beyond poverty and those who ran that initiative knew it wasn’t about kids in poverty, it was about socializing medicine.”

The amendment failed 33-65.

Rep. Ken Peterson, R-Helena, said the federal government uses matching dollars in these programs to suck states into the same debt it faces.

“Many of the things that come into the health services I’d class as charity,” Peterson said. “Pure charity.”

But Rep. Sue Dickenson, D-Great Falls, said health-care spending reflected humanity in hard times.

“We’re not talking about charity,” she said. “We’re talking about justice, we’re talking about investments.”

The next step for HB 2 is the Senate Finance and Claims Committee, where it will be considered and amended before going to the Senate floor for debate.

Debate gets testy over trimming education budget

HELENA – A fight over $1 million divided the House Appropriations Committee today as it attempted to trim the state education budget.

Committee Chairman Jon Sesso, D-Butte, told committee members that they all had different priorities for education money, but the overarching goal needs to be a balanced budget.

“It’s really not appropriate to say that we should trim it in ways 10 of us wish and 10 of us don’t,” Sesso said. “We have to trim the budget as a group of 20 people.”

The million-dollar contention began with a $1.5 million allotment for the University System agencies. The money was not in the governor’s budget, but was added in during subcommittee hearings by a Republican majority, 4-3.

Democrats proposed an amendment that would take $1 million of the $1.5 million and split it between Montana PBS and non-beneficiary students at tribal colleges.

Republican lawmakers fought against the amendment, saying the agricultural extension agencies need all of the money to survive.

“It will help the economy of the industries important to Montana,” said Rep. William Glaser, R-Huntley. “I’m not willing to give up the slight gain we’ve gotten here.”

Supporters said it would fill the gap for tribal colleges and help fund PBS. Both were given one-time-only funding last session.

“It’s not an injection in the arm,” said Rep. Cheryl Steenson, D-Kalispell. “It is required for the tribal schools.”

The amendment died on a 10-10 party-line vote.

The battle for the same million dollars continued in the next proposed amendment, which said if the money could not be reallocated to those programs, it should be removed entirely.

The amendment's sponsor, Rep. Dan Villa, D-Anaconda, reminded committee members that an earlier motion to give the Office of Public Instruction more money to investigate teacher-related sex crimes was voted down due to money concerns.

“I can’t in good conscience leave a million dollars in new money on the table when we’re unwilling to fund getting bad teachers out of the classroom,” Villa said.

Rep. Duane Ankney, R-Coltrip, said Villa’s comments were inappropriate.

“We have school boards and superintendents and principals and teachers that do a real good job keeping bad teachers out of the classroom,” Ankney said.

- by CNS correspondent Molly Priddy

Legislature's revenue projections slip yet again

HELENA – The Legislature's principal financial forecaster is predicting another $30 million drop in Montana's future revenues.

Analyst Terry Johnson's report blamed continued erosion in future revenues on declining insurance-tax payments, a smaller-than-expected increase in individual income-tax collections, declines in oil and natural gas production taxes, and low crude oil prices.

State cigarette tax revenues are expected to decline by $11.3 million over the next three years due to a federal tax increase from 39 cents per pack to $1 per pack in April.

Vehicle registration fees and taxes are expected to fall over $11 million in the next three years because fewer Montanans are buying new cars and are choosing instead to re-register older models.

This report is the third prediction of falling estimates since just before the current legislaive session began. Johnson predicted a $135 million revenue decrease in December and another $85 million decrease in January. The total predicted revenue decline is now $250.9 million.

Legislative leaders said Friday they had been expecting another decline in future revenues, considering the current national economic crisis.

"I'm disappointed it's continually going down," said House Speaker Bob Bergren, D-Havre.

The Legislature’s best guess on future revenues is important because it guides lawmakers’ spending for the next two years. Lawmakers are required by the state’s constitution to submit a balanced budget.

Bergren said the House will probably adopt the latest revenue prediction this week.

Senate President Robert Story, R-Park City, said lawmakers will have to start making big decisions about the budget even though they expected falling revenue numbers.

"It's probably right where we were expecting to be," Story said.

So far, the falling projections have lawmakers considering cuts to scheduled increases in spending and not actual deficits that are forcing other states to lay off workers.

Still to be considered are the effects the new federal stimulus law will have on Montana’s budget.

Gov. Schweitzer said last week the state should receive at least $600 million in federal money, with much it earmarked for health care, transportation projects and education.

- by CNS correspondent Molly Priddy

Legislative Budget Planners Urge Caution

HELENA – The Legislature’s chief financial forecaster has a new nickname. Call him “Doctor Doom.”

At least that’s what it says on the T-shirt hanging on the back of Terry Johnson’s desk chair these days. As a fiscal analyst for the Legislative Financial Division, its Johnson’s job to make educated guesses about how much money state government will have to spend in the future.

At the current rate of spending, the money won’t last beyond the next biennium, Johnson told legislators Tuesday. If trends hold, the 2011 Legislature could face some gloomy choices, he added.

Johnson and other analysts suggested legislators ponder what they would do if revenues don’t rebound. Among the questions legislators should consider, they said, is whether to continue funding the most expensive budget items – education, the prison system and health and human service programs – at current levels.

Analysts also suggested lawmakers consider finding money for a “rainy day” fund.

-- Molly Priddy, CNS correspondent