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Montana state budget

The state of Montana may be facing a $60 million budget shortfall by mid-2011, according to 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]

Montana has a total state debt of approximately $9,533,441,000, when calculated by adding the total of outstanding official debt, pension and other post-employment benefits (OPEB) liabilities, Unemployment Trust Fund loans, and the budget gap. ^[3]

See also: The Montana State Budget on State Budget Solutions

[edit] FY2012-13 State Budget

• See past state budgets

The Legislature's chief revenue forecaster told lawmakers in Dec. 2011 that Montana's budget is projected to have a $426.7 million surplus by mid-2013.^[5]

Republican legislative leaders and the governor agreed to a compromise budget plan contained in House Bill 2. The House approved the bill on April 27, 2011, and was it endorsed by the Senate in a critical initial vote. The compromise includes spending less in state tax money than the governor proposed but spending more from the general fund than Republicans initially proposed. It also restores about $100 million in federal money.^[6]

Find the state budget analysis provided by the Montana legislature here.

[edit] Governor's Proposed Budget

On November 15, 2010, Gov. Schweitzer proposed a $3.7 billion general fund state budget for FY2012-13.^[7] The budget ends FY2013 with a $125 million ending fund balance, or general fund surplus, as of the end of the two-year budget period in mid-2013.^[7]

Highlights of the budget include^[7]:

• increases in school and university funding
• reducing homeowner property taxes
• eliminating business equipment taxes for all but the largest companies
• a 1% pay increase in January 2012 and a 3% increase in January 2013, with the state's contribution to employee health insurance remaining the same, pursuant to a deal reached with unions awaiting ratification by union members.^[7]
• $95 million worth of transfers of money from other funds to beef up the general fund^[8]

Schweitzer's estimate of state general fund tax collections in November 2010 for FY2012-13 of $1.747 billion and $1.846 billion, respectively,.^[7] In December 2010, Schweitzer said that state tax collections were outpacing earlier estimates and he predicted that there would be an additional $120 million available for the FY2012-13 state budget.^[9]

The 2011 Legislature will begin drafting the general fund budget for the biennium when it convenes in January 2011.^[10]

[edit] Revenue Forecasts

In Sept. 2010, the legislature's chief revenue forecaster estimated that state spending for mid-2011 to mid-2013 will be $300 million over the projected revenues for that period.^[11] Assuming that all current programs are extended at their current levels, the state's projected total expenses for the next two years are $3.94 billion while the mid-range of anticipated revenues is $3.572 billion for the period beginning July 1, 2011, according to estimates from the Legislative Fiscal Division.^[10]

It previously forecasted that the state could need an additional $400 million to continue current government services for the FY2012-13 biennium.^[12] 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.^[12] Gov. Brian Schweitzer called the Division's assessment "crazy" and said he threw it in the trash after he read the third page.^[12] He said that the estimate was wrong and that he did not expect layoffs or raising taxes would be necessary to balance the budget.^[12] The governor said that some of the state's $327 million cash reserves could be used to fill the budget gap.^[12] 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.^[12][13] In addition, the governor said that he would tap $341 million in cash reserves to balance the budget should it be necessary.^[13]

[edit] Union Negotations

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.^[14]

In response to the union's announcement, the governor's office said 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.^[14]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."^[14]

[edit] Budget transparency

• See sample transparency legislation at the Sunshine Standard

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,^[15] as did HJ 43.^[16] 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] Government tools

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

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] FY2011 State Budget

Find the state’s FY2011 Comprehensive Annual Financial Report (CAFR) compiled by the state government here.

At the conclusion of FY2011, the Department of Public Health and Human Services, the state's largest agency, returned nearly $28 million of unspent funds to the state treasury, and the the 2013 Legislature will decide where the money goes.^[17]

As of Sept. 2010, the Legislature’s chief revenue forecaster projected state's projected general fund balance for the FY2010-2011 could be as high as $235.6 million, which is significantly higher than the estimate made in January.^[11]

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.^[18] The U.S. Education Department estimates that the money will save about 700 of K-12 teachers' jobs in Montana.^[18] 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."^[18]

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.^[19] 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."^[20]

Gov. Schweitzer cut most executive agencies’ budget by 5 percent in the FY2011 state budget.^[21] Cuts include^[22]:

• 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.^[14]

[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.^[23] 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. ^{[24] [25]}

[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.^[26]

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.^[27] 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.^[28]

[edit] Stimulus

Montana has received $1.5 billion in federal funding from the American Recovery and Reinvestment Act of 2009.^[30]

[edit] Public Employees

Main article: Montana public employee salaries

Main article: Montana public pensions

According to 2008 Census data, the state of Montana and local governments in the state employed a total of 79,153 people.^[31] Of those employees, 46,560 were full-time employees receiving a net pay of $161,277,671 per month and 23,534 were part-time employees paid $19,716,027 per month.^[31] Nearly 50% of those employees, or 39,280 employees, were in education or higher education.^[31]

[edit] See Also

• Montana taxpayer-funded lobbying
• Montana public pensions

[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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