Though it is evident the national economy is making a turnaround, Montana is still struggling to keep its financial head above water. The situation is currently hopeful, but guarded. Montanans are resilient and always look to the future.
Agriculture prices for grain and livestock are down or sideways, though primed for a rebound. Coal is unnecessarily in disfavor, but still provides the backbone for our electric power. Small business is uncertain about the future and careful about expansion. All of this affects how much revenue the state government will receive in payroll and corporate taxes, and what programs and services are funded.
The 2017 Legislature passed and the governor signed Senate Bill 261 that put in place an automatic 5 percent across-the-board and other defined cuts if revenue dropped below certain levels, with the intent of protecting a decent reserve and stabilizing the budget. The governor also has the power to cut up to 10 percent from the budget as granted in MCA 17-7-140.
Revenues dropped quickly after the regular legislative session and rapidly blew through the automatic cut levels and into the realm of governor cuts. When we were called into a special legislative session in November, there was a big push to raise taxes to make up this shortfall, but the Legislature held the line and pared back government instead.
As a result, in these tight but expectant times, the philosophy of how the money is being spent becomes even more important.
As vice chair of Children, Families, Health and Human Services Interim Committee, I and the other members have had to address with the Department of Public Health and Human Services how the cuts were being implemented. In spite of $3.5 million automatically coming from provider rates, the department intended to further cut these rates, which would have resulted in a total 3.47 percent cut. This adversely affects dentists, doctors, hospitals, nursing homes and others that provide services to the most needy in our state.
Many of us in the committee were having difficulty getting information that we could understand from DPHHS, if any information at all. We as a committee voted 7 to 1 to object to the rulemaking that would implement these cuts. Why, if the $3.5 million was clearly articulated, was more being cut? Though there was talk that the committee was “grandstanding,” there was a sincere desire to know how the department was making the cuts.
I have gained a better understanding what part of this is under legislative authority, and what part, if not clearly directed by the Legislature, is under executive authority. The Legislature can direct money, but would not want to allocate every paper clip.
As part of the investigative process, it became evident that while the Legislature had directed the $3.5 million, it had not excluded additional provider cuts from the 5 percent automatic cuts. However, through the objection process, we encouraged the department to look at internal cuts which reduced the original 3.47 percent cuts down to 2.99 percent.
Reconciling this problem was important because of future increased pressure to the budget. The special session cut another $49 million from DPHHS, and we have not yet heard how that will play out. Also, the new federal tax cuts, while they are a benefit to individuals and businesses, may cause a serious decrease in revenue to the state.
The Legislature needs to be hopeful, yet vigilant. It needs to do everything it can to reduce or prevent any further rate reductions that hit private providers and those they serve. And it needs to build a better rapport with DPHHS, and ask the hard questions early and often.