Incoming Republican and Democratic legislative leaders agreed Thursday that the state needs to make a major investment in infrastructure in 2015, but disagreed over how best to pay for it.
During a panel discussion before the Montana Taxpayers Association’s annual meeting, Republican leaders favored paying for infrastructure with cash, while Democratic leaders backed Gov. Steve Bullock’s plan to use some cash but to issue bonds to finance the rest.
The leaders did agree that the state needs to spend on infrastructure such as water, sewer, roads and bridges and broadband Internet connections, but acknowledged they will fight over how to pay for it.
Incoming Senate President Debby Barrett, R-Dillon, said, “We should fund infrastructure with cash, but not debt.”
“I am a proponent of paying for it the same way we pay for a house or a car or anything,” said Senate Minority Leader Jon Sesso, D-Butte. “We put a little money down and we borrow the rest because we can afford it. We can take advantage of these extraordinarily low interest rates that we enjoy right now and make an investment in our future.”
Incoming House Speaker Austin Knudsen, R-Culbertson, said, “We will fight over how to pay for it, how much, but I’m confident we’re going to do something.”
House Minority Leader Chuck Hunter, D-Helena, said, “I’m excited by what I see in the governor’s package, I do think the balance of cash and bond makes sense, and I think we’ve got the ability to do quite a bit this session.”
The leaders disagreed along partisan lines on some other issues.
The Republican leaders expressed concerns about the impact of declining oil prices on state revenues and therefore called for holding the line on general fund spending.
“We will have good conservative core values in spending in energy development,” said incoming Senate President Debby Barrett, R-Dillon. “We’re going to proceed cautiously.”
Knudsen said Bullock’s initial budget’s revenue estimates overestimated oil prices. which have dropped in recent weeks.
“We’re going to get to a point here, if this thing keeps going, if OPEC keeps pumping and the price keeps going down, our tax revenue is not just going to slow down and decrease, it’s going to stop because they will just shut those wells in,” Knudsen said. “They’re not going to keep producing oil at a loss.”
He called for using some of the budget surplus to cut taxes, probably individual income taxes.
Barrett said the Legislature does a good job of estimating revenues, but “we don’t do a good job when the trends change.”
She said Bullock’s budget estimates revenues coming at a greater rate, which led him to propose $300 million in additional spending.
Sesso agreed the state faces some “pretty daunting challenges,” but said the state is fortunate to start with a budget in the black.
Hunter said he believes the oil price volatility “is not a thing of the past” and may continue for six to 12 months.
“I wouldn’t want to hang our future on too low of a price,” Hunter said. “We have many opportunities to update our data."
Knudsen said, “We shouldn’t fund our ongoing spending with such a volatile commodity.”
Hunter and Sesso endorsed Bullock’s made-in-Montana plan to extend Medicare to 70,000 Montanans, while Barrett questioned whether the federal funds needed would be available, given the $18 trillion federal debt.
Knudsen said he believes it’s the House’s job to be cautious in the appropriations process, which begins in that body.
Sesso said it’s up to the Legislature to make the best judgments it can using the economic data available.
“My optimism comes from the fact that we have balanced the budget every time,” Sesso said. “We have a balanced-budget constitutional obligation, and we take it very seriously. If we can’t afford some of the programs that are being proposed, then we’re not going to fund them.”