House speaker says bill not drafted in 'vacuum'

HELENA — Responding to criticism of a senate bill which has triggered cuts and layoffs within state government, House Speaker Austin Knudsen said Thursday it was crafted to take on the size of government bureaucracy in times of economic downturn and that the governor’s office had knowledge of what was involved.

“These weren’t cuts just made in a vacuum,” the Culbertson Republican said, adding the governor’s office had “fingerprints” on the bill. “There was a lot of flexibility built in.”

Knudsen’s comments came just days after the governor’s office told agencies to follow Senate Bill 261, which called for $97 million in spending cuts due to revenue projections.

SB 261, passed mostly by the Legislature's Republican majority, helps the governor deal with budget reductions when there are revenue shortfalls and, when there are excess funds, to pay down the debt service on bonds for capital projects previously authorized by the legislature.

It leaves just under $200 million in reserves. If revenues are lower than expected, "triggers" bring automatic cuts across state government and further cuts to specific agencies

The reductions mean 16 full-time state employees will lose their jobs, cuts to education funding and prompted more than 100 people Thursday to testify against proposed Medicaid cuts.

“The fact is pointing the finger at the Republican Legislature and saying we did it is not true,” Knudsen said. “There was some flexibility to make reductions and reduce the size of some agencies.”

He said the bill was intended to make reductions to the size of government and not make it painful for the people of Montana. He noted government has grown under the last two governors.

Ronja Abel, the governor’s communications director, said Gov. Steve Bullock had proposed a balanced budget with a $300 million rainy fund that aimed to increased efficiencies to save taxpayer dollars where possible, yet still make responsible investments in areas Montanans expect.

 She said Republican leadership rejected his efforts.

“After Republican legislators refused to raise revenues and instead adopted an inflated revenue estimate, it became clear that the budget in its current form would be unacceptable to the governor and risked the need for a special session,” she said.

She said the governor met with Republican leadership, including Knudsen, Sen. Llew Jones, R-Conrad and Rep. Nancy Ballance, R-Hamilton - at their request - to mitigate that risk. This was done in SB 261, Abel said.

"Given the options, this bill represents the best compromise that could be reached at this time," Budget Director Dan Villa said of the bill.

The bill passed the House 73-27 and 35-13 in the Senate. 

Villa also noted that the Republicans had inflated the revenue estimate by $100 million despite warnings by Democrats “so as not to make tough decisions,” which was another comment that Knudsen took issue with.

Knudsen said when lawmakers left Helena in April projections were looking good.

“We were working with the best information (we had) at the time,” he said. “We were hoping not to see the cuts but this is where were we are today.”:

He said the House Taxation Committee, which is in charge of revenue projections, based its decision on information we had from staff.

“It was based on solid data,” he said.

House Minority Leader Jenny Eck, D-Helena, said it was crucial to discuss what led the Legislature to SB 261.

“It’s important to look at the whole train and not the wreck at the end,” she said.

Eck said every bill that would have shifted some of the tax burden on to corporations or the wealthy was killed by the GOP.

She said the revenue estimates did not come in as the Legislative Fiscal Division had projected and SB 261 was a “hoping for the best but planning for the worst” solution.

“SB 261 was a plan B,” she said. “These cuts were ugly and avoidable.”

She said Republicans made choices to protect some people on the backs of others.

“We had an opportunity to bring in revenue from the right places,” she said.

Eck is a Helena resident and said it's been tough to watch how the cuts affect state government.

“These are my people and it’s heartbreaking,” she said. “There were a whole series of policy decisions that backed us into this corner and it was avoidable.”

Knudsen said raising taxes was not an option.

“If it is a choice between reducing the size of government or raising taxes, I will reduce government every time,” he said.

Knudsen said Montana is in an economically compressed time now, citing record low agriculture prices last year, no new oil wells and coal decimated.

“We shouldn’t be surprised” about the cuts to government, he said.

Knudsen said he knows Montana Historical Society members are upset about their cuts, however, it was better to cut there than other departments.

“But with all due respect, history is important but it’s not as important as incarcerating criminals or providing Medicaid services,” he said.

State government remains Montana’s largest principal employer, the state Comprehensive Annual Financial Report put out by the Department of Administration reports. In Montana, the state government has about 21,000 employees, followed by the federal government with 12,500 employees and Walmart ranking third with 4,500 employees.

Knudsen added that most Montanans are tightening their belt to get by with less.
“It’s not bad to have state government do the same thing,” he said.

He said the idea of raising taxes when the economy is down is incorrect.
“It’s shortsighted and it’s bureaucracy not living within its means.”

Knudsen said he would make the same decisions today.

“I wouldn’t do it differently," he said, "when the economy is down you cut government.”