Montana state budget

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The state of Montana may be facing a $60 million budget shortfall by mid-2011, according to the a February 2010 forecast by the state's Legislative Fiscal Division.^[1]

The state, however, will receive approximately $70 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[2]

See also: The Montana State Budget on State Budget Solutions

[edit] FY2012-13 State Budget

The Legislative Fiscal Division forecasted that the state's coffers, hit hard by the economy, could need an additional $400 million to continue current government services for the FY2012-13 biennium.^[3] When the division made the forecast in June 2010, it also presented state lawmakers with a list of ways to balance the budget, including deep cuts, as well as tax and fee proposals. Proposed cuts included early release of prisoners and closing MSU-Northern.^[3] Gov. Brian Schweitzer called the Division's assessment "crazy" and said he threw it in the trash after he read the third page.^[3] He said that the estimate was wrong and that he did not expect layoffs or raising taxes would be necessary to balance the budget.^[3] The governor said that some of the state's $327 million cash reserves could be used to fill the budget gap.^[3] The governor also said that strong grain and cattle prices and a large wheat harvest could boost the state's economy, as could interest in oil shale beds.^[3]

Eric Feaver, the head of the MEA-MFT union that represents approximately 3,000 state employees, said that he would not agree to a deal with Gov. Schweitzer that included a pay freeze. The union agreed to a pay freeze for the prior biennial budget and said that four years without a pay increase is too much. The Montana Public Employees Association, which represents approximately 3,500 state employees and 1,500 university employees, also plans to seek the same agreement in joint negotiations.^[4]

In response to the union's announcement, the governor's office siad that everyone, including state employees, must reduce their expectations given the current difficult economic conditions. Budget Director David Ewer did not rule out a potential pay freeze and noted that many state employees in other states have taken pay cuts, furloughs or layoffs.^[4]

Traditionally, the governor meets with union representatives prior to legislative budget negotiations. If an agreement with the governor is not reached, union negotiations would take place during legislative budget process, a process that union leader Feaver described as "about the worst possible outcome, but it may be what we have to do."^[4]

[edit] FY2011 State Budget

The federal stimulus passed by Congress in August 2010 provides $68 million to the state. Montana will receive $38 million in Medicaid funding and $30.7 million for education.^[5] The U.S. Education Department estimates that the money will save about 700 of K-12 teachers' jobs in Montana.^[5] U.S. Rep Denny Rehberg said of the stimulus, "Montana has a balanced budget, so it's beyond insulting to be forced to pay off California's debts. But that's exactly what Speaker Pelosi is asking taxpayers to do."^[5]

In a memo to agency directors and administrators,Gov. Brian Schweitzer, in keeping with 17-7-140 MCA, directed state agencies to manage their budgets in order to reduce general fund expenditures and noting that the reductions, voluntary and otherwise, would total $41.1 million.^[6] The Montana Code Annotated 17-7-140 states that "the governor shall ensure that the expenditure of appropriations does not exceed available revenue" and that the governor "shall direct agencies to reduce spending in an amount that ensures that the projected ending general fund balance for the biennium will be at least 1% of all general fund appropriations during the biennium."^[7]

Gov. Schweitzer cut most executive agencies’ budget by 5 percent in the FY2011 state budget.^[8] Cuts include^[9]:

• Nearly $17 million in human-service programs, including cancellation of a $7 million increase in rates paid to nursing homes, groups homes for the disabled, mental health centers and others for their clients funded by Medicaid.

• Close to $7 million at the Department of Corrections, including elimination of funding to build a new inmate pre-release center in Kalispell and a freeze on per-diem payments to some privateand locally run prisons and correctional programs.

• Approximately $7 million of state University System funds.

• Approximately $4 million in public school funding, including money for school building projects and a portion of block grants that are distributed to school districts statewide.

Union leaders negotiated with the governor and agreed to a pay freeze in exchange for help with health insurance as the recession hit and the state budget situation tightened.^[4]

[edit] FY2010 State Budget

Montana ended FY 2009 on June 30, 2009 with a surplus of $369.1 million, an enviable position compared to most other states, but expects a drop in revenues over the FY 2010 and FY 2011 biennium. Stronger than anticipated individual, corporation, and oil and gas production tax collections led to an ending fund balance 3 times higher than predicted in 2007, but now estimate a -5.2% drop in revenues over the 2011 biennium. The two-year budget passed by the Montana State Legislature and signed by Gov. Brian Schweitzer estimates General Fund revenue for FY 2010 and FY 2011 will total $3.6 billion (2008 & 2009 was $3.8 billion) plus the $369.1 million surplus provides $4 billion with $3.7 billion in appropriations, leaving an estimated ending fund balance on June 30, 2011 of $282.4 million.^[10]

[edit] Budget Background

Montana operates on a biennium budget. The biennium includes a 24-month period from July 1st of odd-numbered years to June 30th of odd-numbered years, such as the 2009-11 biennium, which runs from July 1, 2009 to June 30, 2011. According to state law the Governor is required to submit a budget recommendation to the Legislature by November 15 on even numbered years.^[11] The state Constitution gives sole authority to the Legislature to appropriate state funds. The House and the Senate review the recommended budget along with any requests made beginning January of the next fiscal year and additional revenue forecasts. ^{[12] [13]}

[edit] Budget figures

The following table provides a history of Montana's expenditures and gross domestic product (GDP).

Fiscal Year	Expenditures (billions)	GDP (billions)
2000	$5.0 [14]	$21.4 [14]
2001	$5.3 [14]	$22.5 [14]
2002	$5.6 [14]	$23.6 [14]
2003	$5.9 [14]	$25.5 [14]
2004	$6.2 [14]	$27.5 [14]
2005	$6.4 [14]	$30.0 [14]
2006	$6.9 [14]	$32.0 [14]
2007	$7.5 [14]	$34.3 [14]
2008	$8.2 [14]	$36.7 [14]
2009	$8.8* [14]	$39.3* [14]

• NOTE: The figures for FY 2009 won't be finalized until the end of the fiscal year.

$3.7 Billion General Fund Spending includes:^[15]

• Public Education 34.7%, $1.28 billion
• Human Services 19%, $704 million
• Corrections 9.2%, $340 million
• Higher Education 8.1%, $300 million

$10.7 Billion Total Fund Spending includes:^[16]

• Human Services 29.7%, $3.2 billion
• Public Education 15%, $1.6 billion

[edit] 2008-2009 budget crisis

See also: Montana state budget (2008-2009)

[edit] Accounting Principles

Main article: Montana government accounting principles

Tori M. Hunthausen is the Legislative Auditor. The responsibility of the Legislative Audit Division is to conduct financial and compliance, performance, and information system audits of state agencies or their programs, including the university system. Their audit reports are published online. The Legislative Auditor is solely responsible to the Legislative Assembly and is appointed by and operates primarily through the Legislative Audit Committee. The term of office is for two years beginning July 1 of each even numbered year.^[17]

The Institute for Truth in Accounting (IFTA) rates Montana “Timely” in filing the state’s Comprehensive Annual Financial Report (CAFR) – The annual report of state and local governmental entities. IFTA rated 22 states timely, 22 states tardy, and 6 states as worst. IFTA does not consider Montana's CAFRs, and those of the other states, to be accurate representations of the state’s financial condition because the Generally Accepted Accounting Principles (GAAP) basis does not include significant liabilities for the pension plans and for other post employment benefits, such as health care.^[18] Montana's CAFRs are published online by the Department of Administration, State Accounting Division, State Accounting Bureau. Mr. Paul Christofferson is Administrator of the Montana State Accounting Division. The Accounting Bureau is responsible for the preparation of the CAFR and auditing all local government entities.^[19]

Credit Rating	Fitch	Moody's	S&P
Montana[20]	AA	Aa2	AA

[edit] Budget transparency

Montana currently has no statewide, official spending database online. On January 17, 2009, Montana Senator Joe Balyeat of Bozeman introduced SB 241, the "Taxpayer Right to Know Act." This bill would have created a searchable Website that, among other things, would have listed information about the state's budget. Data would have come from executive, legislative, and judicial agencies, and would have included appropriations, expenditures, and revenue sources. According to Senator Balyeat, that the taxpayers' "constitutional right to know where their money is going is something that we as the people's elected representatives, the legislature, believe is paramount," and "we believe this bill will do exactly that." Given that the "Taxpayer Right to Know Act" had over half of the legislature signed on as co-sponsors, the bill appeared to have had a high probability of passage. However, SB 241 died in committee,^[21] as did HJ 43.^[22] House Joint Resolution 43 would have mandated that Montana's Legislative Finance Committee evaluate what would be necessary to put a state spending site online. Both bills died in committee during the spring of 2009.

[edit] News

Recently, the Montana Policy Institute launched a website dedicated to bringing transparency to Montana. Visit the site here. Visit the homepage of the Montana Policy Institute here.

[edit] Government tools

The following table is helpful in evaluating the level of transparency provided by a state spending and transparency database:

Criteria for evaluating spending databases

State Database	Searchability	Grants	Contracts	Line Item Expenditures	Dept/Agency Budgets	Public Employee Salary
None	n/a	n/a	n/a	n/a	n/a	n/a

See also: Evaluation of Montana state website

[edit] Independent transparency sites

Currently, the Montana Policy Institute has posted a transparency survey to determine what users wish to see in a transparency-focused website.

Additionally, the Montana Policy Institute has launched a website dedicated to bringing transparency to Montana. Visit the site here. MPI has also launched a site dedicated to education transparency, a site which "contains district level revenue and spending data in an easy to use format. You'll be able to compare up to five districts to each other and to state averages across several meaningful criteria. You'll be able to see revenue and spending trends for each district. And you'll be able to see just how difficult it is to get publicly available information about what your schools are spending your money on."

[edit] Public employee salary information

Main article: Montana state government salary"

[edit] Economic Stimulus Transparency

Montana will receive approximately $70 million from the federal government under H.R. 1586, a $26 billion plan to give states money for Medicaid and education that the President signed into law on August 10, 2010.^[23]

The Economic Recovery and Reinvestment Act of 2009 designated $787 billion to be spent throughout the U.S. Of that $787 billion stimulus package, it is estimated that 69%, or over $541 billion, will be administered by state governments.^[24] Montana will receive an estimated $603,398,241 ^[25]

Two Montana project were noted in Senator Coburn and Senator McCain's "Summertime Blues, 100 stimulus projects that give taxpayers the blues" report. The two projects included Helena’s use of $18,500 to paint a mural on a band shell and Montana State University spending $141,002 to send nine students on a six-week trip to China to study dinosaur fossils.^[26]

• The economic recovery website to show how legislators and government officials in Montana are spending Federal funds is available here.

[edit] Errors in ARRP

On November 16 and 17, 2009, many errors were found in the $747 billion plan that showed the plan set aside money for districts that do not exist. According to Recovery.gov, the plan shows its funds will go to 884 Congressional Districts, though there are only 435.^[27][28]

Though Montana only has one Congressional District, the ARRP website shows it gave funds to 13 Districts. The twelve fictional Districts received $292,383,105 in funds to "create/save" a total of 1214.2 jobs.^[29]

It was also reported that 27 state agencies expected to received $15 million in stimulus funding failed to report spending during the first fiscal quarter.^[30]

[edit] See Also

• Montana taxpayer-funded lobbying

[edit] External links

[edit] Additional reading

• State of Montana,"2011 Biennium Executive Budget"
• Gov. Brian Scheitzer,"2009 State of State Address," January 28, 2009

[edit] References

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