Dozens of memos submitted to Gov. Steve Bullock’s office last week provide a preliminary look at which services might be cut, reduced or delayed as state officials plan for revenues to come in lower than projected.
Budget Director Dan Villa announced Wednesday that the governor would use his authority to reduce statewide spending from the general fund over the next two years by up to 10 percent, or $236 million. That’s on top of about $70 million in cuts finalized earlier this summer under a different provision of state law as part of a contingency plan negotiated with legislators.
Each state agency has until Friday to submit recommendations to Villa about where cuts should be made. They will then be reviewed by the governor and legislators before final decisions are announced late this month.
“It is a long process and it is, for state government, very transparent,” Villa said. “Any reductions that agencies propose will be public record when we receive them."
Earlier this month, agencies under the governor’s control submitted proposals on how to reduce their spending by 5 percent. Those proposals are collected by the budget director every year in the usual budgeting process as a precaution. Legislators familiar with the budget process say it is likely that the ideas listed in those memos also will appear in the 10 percent proposals being developed, giving Montanans an early look at what impacts might lie ahead.
The suggestions include:
• laying off employees who process some permits, which would delay how quickly the state can respond to requests;
• eliminating a program that sets standards for cleaning up houses contaminated by meth;
• reducing spending on pavement preservation;
• cutting funding for 14 optional Medicaid services serving the elderly, people with disabilities or low incomes;
• slashing social and health services such as family planning and HIV treatment;
• eliminating a veterans service outreach program of the National Guard;
• laying off two human rights investigators or closing the entire Human Rights Bureau to let federal officials take over;
• requiring some Department of Corrections staff, but not correctional officers, to take furloughs;
• closing some alternative incarceration and treatment programs;
• and eliminating several permanent firefighting positions.
Some state programs are excluded by law from being cut, including the judicial and legislative branches, BASE payments to K-12 schools and the Montana School for the Deaf and Blind. They have, however, been asked to voluntarily participate and traditionally have done so.
Other exemptions include salaries of elected officials and principle interest on state debt. The Department of Justice, State Auditor, the Board of Regents and the Office of Public Instruction — all agencies over which the governor does not directly control the budget — cannot be reduced by more than the average cut made at other departments.
Programs funded solely with federal money will not be affected, although cuts could be amplified in programs that require state matching dollars to unlock federal funds.
Senate Finance Chairman Llew Jones, R-Conrad, cautioned against reading the 5 percent proposals as a literal list of cuts to come.
“A previous budget director once told me, ‘The agencies will always offer up the uncuttable, the fire trucks and ambulances,’” Jones, a veteran of state budgeting, said. “A lot of times, items are chosen because they create the greatest public outcry.”
Sen. Jon Sesso of Butte, the Democrats’ budget guru, said the state “doesn’t have time for pretend” and said he believed department leaders would step up with honest, creative solutions.
“People just generally come together in a crisis. We read about it all week with (Hurricane) Harvey pounding Texas,” he said. “When people are hurting and things are not good, it’s time to throw the politics out and be humans helping humans.”
House Appropriations Chairwoman Nancy Ballance, R-Hamilton, also called for bipartisan collaboration.
“This is a tough, unusual situation that is going to require cooperation on both sides and I hope that this does not get into a political battle,” she said. “If it becomes political, we could cut the wrong things.”
All three legislators lauded Bullock and Villa for making a proactive call for cuts, rather than obscuring and delaying. Nonetheless, they also wonder if the target figure is overly pessimistic, saying their back-of-the-napkin math isn’t as dire.
“I can’t argue he’s wrong. Heck, it may be worse, but I would hope not,” Jones said, noting that all revenue projects are probabilities and not certainties. “He’s making assumptions. I’m just making assumptions, too.”
If spending must be scaled back as much as Villa suggests, some layoffs are all but certain. Legislators disagree about whether there is fat left to trim or if the reductions will hit bone.
“The cuts will not be without pain,” Jones said, hesitant to speculate until he sees the proposals. “Our hope is the agencies will do them in a way that impacts the most critical services the least.”
Sesso said the state budget has little room for easy reductions.
“It’s not all skin-deep cuts everyone can tolerate anymore,” he said.
Ballance disagreed, saying that in general she thinks Montana “has room in the budget to cut more.” Ballance, who is among the Republican party’s more conservative members, said the bright spot of the bad budget situation is that it will force agencies to be honest about their priorities and what they can live without. Sometimes that information is difficult to get during the legislative session when there is not enough time to ask granular questions.
“I think we should be doing these reports every year regardless,” she said.