Montana lawmakers end the special session with no tax increase

HELENA — The Montana Legislature ended its special session an hour after midnight Thursday, capping a two-day marathon of meetings with Republicans saying they have put in nearly $230 million in options so Gov. Steve Bullock can close a $227 million gap in the budget without raising taxes.

“Gov. (Steve) Bullock called us into special session with no plan and Republicans stepped up with a plan,” House Speaker Austin Knudsen, R-Culbertson, said after the session adjourned about 1 a.m.

He noted the GOP kept its vow of not raising taxes and remained united.

However, Democrats said Republicans failed to complete the mission.

Bullock on Thursday called decisions from the session a “reasonable and responsible compromise” to balance the budget and pay for the state’s record fire season.

On Thursday afternoon, he told reporters it was not a perfect solution, but it did avoid $150 million cuts for services, which he called “a victory for Montanans.”

He said his administration would now put together the pieces left behind.

Bullock said he was reviewing bills, saying it was likely he would veto House Bill 8, the employee furlough bill. He described the bill as “half baked.” He said he doubted it would stand up to legal challenges.

He felt the state had come far in the past six weeks from where legislative leaders said fixing the budget was the governor’s job.
 

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He said he was asking legislators to come to the table and do the job that Montanans expect. He said the state was better than when lawmakers arrived Monday.

He said the budget ensures seniors will be able to access prescription drugs they need, prevented steep tuition increases, helped children with autism, public safety and rural hospitals.

Bullock said he did not believe he was outmaneuvered by Republicans in the session.

“It’s not about posturing or about who wins or loses,” he said. “If that is how we set the table, the only ones who will really lose are Montanans.”

On Tuesday, Bullock ordered $76 million in cuts after GOP leadership accused him on not properly flexing his gubernatorial powers as outlined in the state Constitution.
 

The reductions as approved by legislators coupled with $94 million in transfers, cuts and delays proposed by the Legislature, $30 million management fee from the Montana State Fund and $15 million for renewing the contract with CoreCivic for operation of the Crossroads Correctional Facility in Shelby.

Legislators submitted a mix of interconnected bills that make it nearly impossible for the governor to reject any part of the plan without further cuts.

It links House Bill 2, the spending plan, to House Bill 6, the transfers, saying that if the governor vetoes HB 2, then HB 6 is void. 

House Minority Leader Jenny Eck, D-Helena, said the solution was far from perfect, "but it allows us to avoid hundreds of millions of dollars in unacceptable cuts that would hurt people across our state."

"I am disappointed that the Republican majority demanded cutting $76 million before they would even come to the negotiating table, and then left town without fixing the full budget shortfall," she said.

 

The prison contract played a crucial role during the session as the governor’s office, along with other Democrats, had called for letting the contact expire in 2019. However, CoreCivic reportedly offered the state nearly $30 million in escrow set aside to purchase the prison to renew its contract.

It was addressed in Senate Bill 9, which created a fund to manage about $30 million in proceeds if the governor negotiates an agreement to extend the contract for 10 years.

Sen. Llew Jones, R-Conrad, said the bill did not set mandates for the governor but gave him options.

Bullock said Thursday that he has not made up mind about Shelby prison. He said he has been in talks with CoreCivic and “do the best thing for Montana taxpayers.”

The state is facing a $227 million shortfall to its $10.3 billion biennium budget following the most expensive fire season in its history and revenues not coming in at projections.

Bullock said his proposed balanced budget was rejected by Republicans who then approved a budget with unrealistic numbers. Republicans have said the governor’s plan had included tax increases and have called for cuts to government spending.

This is the 33rd special session in the state’s history and the first during Bullock’s time as governor. He called the session earlier this month. He had proposed that a third of the shortfall be addressed through budget cuts, a third through temporary tax increases to pay for the state's cost of fighting fires and a third through transfers and other legislation.

The session officially began Tuesday although some lawmakers arrived in Helena on Monday to begin hearings on budget proposals. Many waited for hours on the House and Senate floors as others pounded through bills in committee meetings.

Lawmakers and the administration recommended $94 million in transfers and other savings or income, including temporarily suspending payments into the state employee health care plan ($10.4 million) and the judge's retirement fund ($2.8 million) and auctioning new liquor licenses, which is expected to generate $6.3 million..

State departments not under the governor’s purview made cuts as well, such as the judiciary and legislative branches, the secretary of state, auditor and public service commission.
 

Bullock said many of the transfers are things his staff brought to the table.

The State Fund management fee was apparently a piece of the fiscal puzzle as it had passed the Senate, but failed in the House. The fee was brought back late Wednesday or early Thursday for reconsideration and passed.

Rep Greg Hertz, R-Polson, the speaker pro temp, had argued against the bill and said it would likely not pass legal muster.

Rep. Wendy McKamey, R-Great Falls, likened the move to dipping your hand into someone else’s pocket because they more money than you.

“We should just leave it alone,” she said. “It’s not ours.”

Both houses approved bills proposed by the governor to withhold $8.2 million in block grants to schools (SB2), withhold payments into the state employee health plan for two months to save $10.4 million and to withhold state payments from the judge's retirement system through July 2019 to save $2.8 million. Those amounts are included in the $94 million in transfers and delays.

Lawmakers also sent the governor House Bill 8 that calls for $15 million in employee cuts that can be made by furloughing workers who make more than $50,000 annually. Democrats spoke emotionally against the bill, saying it amounted to further cuts in services to state residents.

A proposal by Sen. Al Olszewski, R-Kalispell, that would require a court order to alter birth certificate sex designation never made to the House floor, even though it had been passed by the Senate.

Olszewski said the Department of Public Health and Human Services overstepped its boundaries in approving the policy and said it was up to legislators to decide. He also said the agency was wrong in finding it would not cost any money to implement the rule.

Rep. Jeff Essmann, R-Billings, said it was his sixth special session, and this was the first time that a deal was not done before lawmakers walked through the door.

“This pressure cooker is due to his actions, not ours,” Essmann said.

The two-day session ended on a poignant note as Rep. Kelly Flynn, R-Townsend, made the motion for adjournment. Flynn, 63, said he has cancer.

But he remained spirited.

“Cancer may take my body but it will never take my heart and soul,” he said.

A line of lawmakers lined up to hug him as they left.

This story contains information from the Associated Press.

 

The Associated Press contributed to this story.