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HELENA - Republican legislators grilled Gov. Brian Schweitzer's budget director Thursday over whether the administration is proposing to cut spending in the right places and is overly optimistic about improving corporate tax collections.

At a meeting of the Legislative Finance Committee, Republicans questioned the Democratic governor's budget director, David Ewer, who recommended $40.5 million in spending cuts because of declining state tax collections.

The panel can vote Friday to ask Schweitzer to change some of Ewer's proposed cuts, but it will be Schweitzer's decision alone where to reduce spending.

In defending his proposed spending reductions, Ewer told the committee, "The Schweitzer administration is about strong fiscal management. It is the core."

Ewer said the proposed budget cuts are aimed at protecting public education, public health and public safety, which he called the core of government.

But Sen. Dave Lewis, R-Helena, a former budget director himself, criticized Ewer for being dedicated to "protecting the core of government" while "cutting off the flow of revenue to agencies outside of the core." On Wednesday, Lewis protested the Schweitzer administration's decision to not release $3.5 million in grants to 50 local governments for water, sewer and other public works projects.

He asked why Ewer hadn't taken such steps as imposing a state hiring freeze and greatly restricting out-of-state travel by employees.

Ewer said most of the money the Legislature appropriates flows out of Helena to the rest of the state for public health and welfare, public safety and public education.

"This administration is looking at every area for economics and austerity," he said.

Ewer called a hiring freeze and cutting out-of-state travel "simplistic" solutions, but noted that 800 state jobs are vacant. As for the travel, Ewer said Schweitzer has told his directors to really watch their agencies' spending.

The administration also is reviewing contracts, leases, telephones, utilities and credit cards used by employees for travel and for fuel.

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Turning to estimates of state revenue sources, Ewer said he's confident that corporate tax collections will be higher than either the executive or legislative branch forecasts.

Bales pressed him, saying that the figures he's seen show the state hasn't turned the corner yet in the recession.

Ewer said he believes economic modeling by both the executive and legislative branches fails to look to the future for corporate financial performance but is too focused on the past. He said 75 percent of national corporations are exceeding their earnings estimates by 10 percent. He believes both the executive and legislative estimates will be low.

Rep. Janna Taylor, R-Proctor, disagreed. She pointed out the closures of Plum Creek Timber Co., Smurfit-Stone Container Corp. and Columbia Falls Aluminum Co. in western Montana and added that Main Street businesses in her district are still suffering from the recession.

"I know more about Main Street businesses because I walk my Main Streets," Taylor said.

Missoulian State Bureau reporter Charles S. Johnson can be reached at (406) 447-4066 or at chuck.johnson@lee.net.

 

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