A special session of the Montana Legislature called to address a budget shortfall adjourned early Thursday morning with a deal that leaves all parties less than satisfied but pleased something was negotiated.
Legislators came to Helena at the start of the week for a fast and furious three days, called back by Gov. Steve Bullock to find ways to patch an anticipated $227 million hole in the state budget caused by lower-than-projected revenues and a $75 million fire bill after one of the worse fire seasons in state history.
Before calling the special session, Bullock proposed splitting the budget shortfall into thirds, with $76 million in cuts to state agencies made by the governor, $75 million in fund transfers and other ways to tap money and $75 million in temporary tax increases.
But Republicans, who hold a majority in the House and Senate, criticized the governor for bringing them back without a solid deal in place. They took the opportunity to craft their own plan that, while not pleasing to everyone in the party, left the caucus saying they were able to claim they fixed the problem without raising any new taxes.
Bills passed by lawmakers bring in about $94 million through fund transfers and delayed payments, above what Bullock proposed. They also bring in $30 million from a fee charged to Montana State Fund, but the law passed says State Fund cannot pass the fee onto those who pay into the workers compensation insurance program. Because they brought in more than the $75 million called for in fund transfers, lawmakers were able to not approve proposals that would have taxed accommodations and rental cars at higher rates than they are now, one of Bullock's suggestions, and eliminate a long list of income tax credits.
A bill requiring furloughs of state employees to generate $15 million was passed, as was one that changes the state liquor license lottery to an auction, which will generate $2.5 million this fiscal year and $3.8 million in fiscal year 2019. Also eliminated were $13 million in block grants for school districts statewide.
A controversial bill that would have stopped the state Department of Public Health and Human Services from implementing a rule to allow people to change the gender on their birth certificate died after the House failed to act on it.
For his part, Bullock made his $76 million in cuts official Tuesday, just after the House convened Tuesday.
An appropriations bill, House Bill 2, caused intense debate between Democrats and Republicans on the House floor. It passed both houses. Democrats call the bill, which would make the governor’s cuts permanent, unnecessary. Republicans have said a separate bill would unwind the cuts if revenues come in higher than expected.
“It’s totally unnecessary,” Rep. Kelly McCarthy, D-Billings, said of the legislation.
Sen. Llew Jones, a Republican from Conrad and key architect of the final compromise, said if the governor wanted to avoid the necessity of a bill like House Bill 2, he should have made his cuts before the session started and not minutes into the start of the first House floor session Tuesday. Republicans had been calling for Bullock to make his cuts in the weeks before the session, and while Jones said he always felt Bullock would take action, some in his party were less sure.
"If you didn't want a (House Bill 2) to come to light, make your damn cuts," Jones said.
Jones carried the so-called unwind bill, Senate Bill 9, which passed early Thursday morning.
It's a complicated vehicle that creates an account to accept hypothetical money from the operator of the private prison in Shelby. Montana contracts with CoreCivic to run Crossroads Correctional Center, which has offered to return to the state $32 million it has placed into an escrow account to offset a possible future purchase of the prison. In exchange, the company wants its contract, set to expire in 2019, extended.
Half of the money from CoreCivic, if the governor chooses to negotiate with them, would go toward the state’s fire fund and the rest could be used at the governor’s discretion. Democrats have said it is a way to tie the governor’s hands and force him to extend CoreCivic's contract.
Jones said while he understands Democrats are ideologically opposed to the prison, both sides of the aisle have issues they are ideologically opposed to. For Republicans, that was tax increases.
The bill didn't leave Bullock without options, Jones said, adding the governor could choose to make more cuts to balance the budget or decide to keep a smaller amount in the state's rainy day fund.
"He may see all the alternatives as not his favored course," Jones said.
Senate President Scott Sales, a Republican from Bozeman, said Senate members “did some good work” in the special session in a condensed setting.
“It’s just really tough when you only have a few days,” Sales said. “We did what we could do and sent the legislation we thought was best.”
Sales said Republicans were happy that they did not pass the tax increases proposed by Bullock. “I’ve ran six times for the Legislature and have always said I’m not going to raise taxes,” he said. “I feel good about the fact that transpired for the most part.”
Sales said negotiations with Bullock went as well as they could.
“The governor is a very affable guy,” Sales said. “I like talking with the governor. Certainly he had some different objectives than we did.”
House Minority Leader Jenny Eck, a Helena Democrat, called the end result "far from perfect."
“The solution before us is 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," Eck said.
Speaker of the House Austin Knudsen, a Republican from Culbertson, said Republicans were happy to not have to raise taxes.
“Republicans came here with the message that raising taxes on hardworking Montanans is not an option. Republicans remained united and strong in standing up for Montana taxpayers. ... The Legislature came to town with our work boots on. We got creative and looked to expand the opportunities to find the best deal for Montana taxpayers, while keeping in mind also those who utilize government services.”
Bullock released a statement after the session adjourned, saying the deal will help offset deep cuts that could have hurt statewide.
"Tonight we reached a reasonable and responsible compromise to balance our budget and pay for Montana's record fire season. While I'm disappointed we were not able to reach a full agreement, I would be remiss not to acknowledge all the progress made to minimize the impacts of severe budget cuts on the most vulnerable among us," he said.
Rep. Kelly Flynn, a Republican from Townsend, brought the motion to sine die and bring the session to a close just after 1 a.m.
In an emotional address, Flynn told lawmakers after the last regular session ended he was diagnosed with cancer in both kidneys, both lungs and has a heart issue.
Flynn was heavily involved in critical bills over the last few days and many lawmakers teared up as Flynn called himself “lucky.”
“I’m way better off than so many people who never had the chance to live a full life like I had,” Flynn said.
“I hope you will live for today, plan for tomorrow and remember yesterday. God willing and even if the creek does rise and if this is the last roundup, I look forward to seeing every one of you again.”