Some budget cuts recommended by the governor's office to reduce spending across nearly all state agencies may have legal conflicts or put state contracts at risk.
A report from the Legislative Fiscal Division on Friday said while most proposed cuts fall in line with legal requirements, some raise concerns, either through conflict with state law, the Constitution or contracts the state has with entities like the privately run prison in Shelby.
The report comes just less than a week before a group of lawmakers gather in Helena to make their own recommendations on state budget cuts required to make up for the state bringing in less revenue than expected. While the amount of money the state brings in from taxes is still increasing, it's at a rate less than estimates adopted by the Legislature. In the fiscal year that ended this summer, the state collected $75 million less than expected. Some predict that figure could be $131 million less than expected in the current fiscal year, which started in July, and even more the following year.
Under state law, when revenues fall short the governor is authorized to make reductions of up to 10 percent. The governor has the authority to dictate cuts within agencies he oversees, but not led by officials that are elected or appointed by the Board of Regents. Those agencies' budgets will be reduced by the average amount of other agencies, and the cuts are to be determined by the elected or appointed officials. At this point, the cuts still are just proposed, but could become real as soon as the end of next week, barring Gov. Steve Bullock calling a special session to bring back lawmakers to explore raising taxes to make up some of the difference.
Ronja Abel, a spokesperson for the governor's office, said Friday the office will review the comments over the weekend and looks "forward to solutions being offered by the Legislative Finance Committee next week."
Some of the legal concerns raised include reductions within the Department of Public Health and Human Services, where one proposed cut would eliminate health care case management for foster children in Missoula, Cascade and Yellowstone counties. That could make the state not compliant with a federal act to improve outcomes for children in foster care.
If the Department of Environmental Quality eliminates an employee who works in the opencut mine permitting process, it could put the state at risk of missing deadlines for processing permits.
The Department of Justice has proposed to close the state crime laboratory in Billings, but opening the lab is required by state law.
Within the Office of the State Public Defender, a proposed reduction would eliminate the use of contract attorneys, something that office said "may cause speedy trial issues and disruption to the judicial system." If the office cannot provide adequate representation, it may be in conflict with state law and federal and state constitutional rights.
To cut spending in the Department of Corrections, officials proposed several cuts to not implement laws passed by the most recent Montana Legislature. That includes funding for six new pre-sentencing investigators. Unless those laws are amended, the department must comply with them, Julie Johnson, staff attorney for the Legislative Services Division, wrote.
The Office of Public Instruction is led by an elected official, Elsie Arntzen, and is not an agency where the governor's office can dictate cuts. The office offered up cutting combined block grants to school districts by $2.8 million, but the grants are written into state law. To make that reduction, the Legislature would need to vote to allow it.
Some local school funding, such as basic payments to districts and special education funding are explicitly exempt from cuts, but Johnson noted even some non-exempt funds have similar protections to the block grants. That includes things like transportation reimbursements. She noted it may be difficult for the office to make its targeted cuts in that area without Legislative approval.
The analysis found the Montana Historical Society has been asked to reduce general fund spending in two of its programs by more than 10 percent — 13.8 percent in the museum program and 48.8 percent in its publication programs in this fiscal year. Next fiscal year, those numbers jump to 18.8 percent and 50.5 percent.
There also were several issues with contracts noted.
The Department of Corrections has proposed reducing the rate it pays the operators of the private prison in Shelby, but if both parties don't agree that contract could be breached.
Next Wednesday and Thursday the Legislative Fiscal Committee meets and must make recommendations to Bullock, a Democrat, about the proposed cuts. After the governor receives the recommendations, he can start making cuts. He also could call a special session, though it's unclear if the Republican-majority Legislature has any appetite for tax increases. The longer it takes to take action, the deeper cuts could end up being as agencies continue to spend under their existing budgets.