Montana lawmakers start debating how to use expected $1B+ budget surplus

Democratic Budget Surplus Event
Posted at 6:28 PM, Jul 13, 2022

HELENA — Montana leaders say, with state tax revenues on the rise, there could be a significant budget surplus when the next state legislative session begins in January. Now, lawmakers are already starting the debate on how that money should be used.

“There’s plenty of grain in the grain bin, and it’s time to give that grain back to the people that put it there in the first place,” Rep. Mary Caferro, D-Helena, said Wednesday.

Democratic lawmakers held a news conference at the State Capitol to lay out their plan for spending $1 billion of the $1.7 billion general fund balance they’re expecting. Much of it would go toward addressing the rising costs of housing.

“Make no mistake: This is an immediate crisis,” said Sen. Pat Flowers, D-Belgrade. “This isn’t something down the road; this is happening now. It’s affecting our neighbors.”

Under their plan, $500 million would go toward a program to provide low-interest loans to developers who build affordable homes. It would be based on the Multifamily Coal Trust Homes program, which has supported six affordable rental properties with $15 million in state funding.

$250 million would be used for property tax relief: providing a one-time tax refund for working Montanans and establishing ongoing assistance by requiring that families’ property tax bills remain below a set percentage of their income.

The Democrats’ plan would also dedicate $125 million each to child care and community mental health treatment – expanding access and providing pay increases.

“We need to do it now; we need to start working on these policies,” said House Minority Leader Rep. Kim Abbott, D-Helena. “And our vision is that we invest in our communities, and we put the money that’s sitting in the bank, idle, right now, to work for our constituents and for our communities and for our economies.”

Democrats are the minority in the Legislature, and several of these proposals are based on ideas they’ve offered unsuccessfully in previous sessions. Abbott said they hope majority Republicans will engage with their proposals and offer feedback.

“$1.7 billion – we need to get that out in communities,” Abbott said.

Republican leaders say they’re also preparing for a surplus of well over $1 billion, which they point to as a sign that the policies they’ve implemented have been working.

“We as Republicans know that our citizens trust us to manage our economy,” said House Majority Leader Rep. Sue Vinton, R-Billings.

Vinton said they have been having discussions with their caucus, and they’re focused on ways to return the surplus to the Montanans who created it. She said tax relief will be a priority, and that could include some form of property tax assistance.

“Certainly we hear from our constituents every day regarding taxing and the hardships that they ensure because of the high taxes, so we’ll be discussing tax relief in multiple forms,” she said.

However, Vinton said GOP leaders want to be cautious about using the surplus – especially about any ongoing spending.

“To use a budget surplus for an ongoing program is, in my opinion, not sustainable,” she said. “So we need to be very thoughtful and very careful about how those surplus funds are utilized.”

In June, the Legislative Fiscal Division released an extensive report that lays out the expected surplus — $1.7 billion by the start of the 2025 biennium. LFD said the general fund balance was likely to be much higher than originally expected because of federal economic stimulus, a rising stock market in 2021 and inflation. The report projects revenues will decrease in fiscal year 2023, after two years of strong growth.