Republican leaders of the Legislature called on Democratic Gov. Steve Bullock Thursday to make cuts to the state budget, anticipating a loss of revenue due to the economic fallout from the COVID-19 pandemic. Bullock said cuts were not immediately needed, crediting the state's reserve funds and swift response to the coronavirus.
The leaders met with Bullock to discuss their concerns. Bullock said that Montana has been able to reopen its economy faster than other states thanks to its early response and low infection rate.
"Because of that, we've reopened much quicker," Bullock said. "From the peak of unemployment, about 30,000 Montanans are now back working."
Montana currently has 563 confirmed cases of COVID-19, the lowest of any state.
Bullock also credited previous fiscal decisions which have increased the state's financial cushion.
"When we walked out of the last legislative session, none of us could have anticipated a global pandemic, but we did anticipate that the unexpected would come our way," he said.
The Montana Legislative Fiscal Division reported in May that the state has $117 million in a budget stabilization reserve fund and $55 million in its fire fund, in addition to $291 million in its general fund.
The division stated that if revenues in the 2021 fiscal year drop by more than 15.4% before Oct. 1, the available fund balance "may not be enough."
Budget Director Tom Livers said the predicted impact in the current fiscal year is expected to be around a 2.7% drop, but a more significant drop –- estimated at about 8% -- is expected in the following fiscal year.
Livers said many variables and unknowns make it hard to accurately predict future revenue losses.
Speaker of House Greg Hertz, R-Polson, said that while the state may have adequate reserves for the coming year, the full economic impact would likely be felt in the following two years. Income tax revenue could be down as businesses are impacted by supply chain delays due to closures in other parts of the country, he said.
Senate Minority Leader Jon Sesso, D-Butte, said he was confident the state would recover quickly from the economic downturn once a vaccine or effective treatment became available.
But Senate President Scott Sales, R-Bozeman, was pessimistic about the state of the U.S. economy.
"I wish I could share your optimism, but I don't," he said. "I think we're in for a long hard slog coming out of this thing."
Montana is more dependent on federal dollars than other states, and it's unclear if Congress will provide additional support, Sales said, pushing the governor to cut spending soon.
Sesso advocated for holding off on any immediate cuts. When the Legislature reconvenes in January, more information will be available to make decisions about needed budget cuts, he said.
House Minority Leader Casey Schreiner, D-Great Falls, said that two of the most expensive services funded by the state – healthcare and education – are more important than ever in light of COVID-19. The former middle school teacher, now running for lieutenant governor, cautioned against cuts to these services.
Bullock said the federal government may provide additional aid to states in the coming months, citing possible funding influx through the Coronavirus Aid, Relief, and Economic Security Act later this summer. Of the $1.25 billion in federal coronavirus relief money already given to the state, $31 million has been distributed.
Iris Samuels is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on undercovered issues.
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