Budget battle begins 

Governor, Republicans set to square off on spending

The 2011 legislative session will be a new experience for Gov. Brian Schweitzer. Never in his term in office has he faced total Republican control of both the Senate and the House, but come January, that's exactly what awaits him. In the past, the governor's relationship with the legislative branch has been, to put it nicely, combative. That's not likely to change and, if the tenor at the release of his budget this week is any indication, the battle has just begun.

By law, governors are required to produce, publish and release their proposed budget for the next biennium in mid-November. For those who have never held the state's budget in their hands, it's big—bigger than most telephone books in Montana. Years ago the halls of the Capitol would be crammed with lobbyists and legislators lugging those big old books around and trying to figure out whose ox was or wasn't getting gored. But now, thanks to the miracle of the Internet, anyone can access the full budget online at http://budget.mt.gov/execbudgets/2013_Budget/default.mcpx.

Every executive branch agency submits its own budget request for each division and bureau, showing in detail what positions will be filled, how many people it will take to do so, how much they'll need in equipment, supplies and travel, how much it will cost for the next two-year budget cycle and where that money will come from. Some agencies, such as Fish, Wildlife and Parks, generate revenue from license sales and fees, enjoy healthy federal funding from excise taxes on sporting goods, and use little if any money from what is called the "state's checkbook," or the General Fund.

Others, however, rely heavily on the General Fund since they lack other sources of revenue, and it is these agencies and expenditures where most of the dollars go and most of the big budget fights are centered. David Ewer, Schweitzer's budget director, summed it up succinctly when he said the state basically spends its money to "educate, medicate and incarcerate," and sure enough, the education, health and human services and corrections budgets gobble the lion's share of the available dollars every session.

The release of the governor's budget also coincides with the arrival of all the newly elected legislators, many of whom are getting their first real look at the chambers where they'll be spending most of their time from January to April. This week, legislators will choose their leaders, appoint committee chairs and assign members to the various committees. They'll also learn the tools and services they have at their disposal within the Legislative Services Division, how to submit bill draft requests and who from the Legislative Fiscal Analysts office might be able to help them decipher the governor's budget.

Because it's "hot off the press," both legislators and the general public have little choice but to accept what the governor declares is in his budget. Schweitzer says he's "creating high-paying jobs, educating our kids, protecting our seniors and keeping our communities safe," and points to sections of his proposed budget to back that up. But the key word here is "proposed." The Legislature, and only the Legislature, is given the constitutional authority to appropriate money and pass laws. So if they agree with the governor's proposals, they'll have to pass the laws to enact them and appropriate the money to do so.

And that's where it gets sticky. Take the governor's proposal to get rid of the business equipment tax, for instance. Schweitzer says he'll free 98.5 percent of Montana businesses from that tax by raising the tax-exempt limits from $20,000 to $200,000, and eventually to $1 million over the next few years. While he has definitely stolen the spotlight on this traditionally Republican issue for the time being, it will be the Legislature that has to change the law to reflect those priorities. Republicans have long believed that the business equipment tax should be completely removed, regardless of the size of the company involved. Schweitzer says the largest corporations in Montana have already factored the tax into their business plans and should continue to pay it.

Given that Republicans totally control the Legislature, they'll probably wind up sending the governor a bill that reflects their long-standing priority of repealing the tax. After all, the GOP is the same party that believes the Bush tax cuts should also be extended permanently for even the wealthiest Americans. If anything, the Republican ties to large businesses recently got even stronger—and if there's one thing Republicans are good at, it's servicing their constituents, including the megacorporations who have so generously filled their campaign coffers.

But if the Legislature completely repeals the business equipment tax, every dollar of revenue that doesn't come from that source will require either spending cuts or another revenue source to backfill the loss. Unlike the Bush tax cuts, which created a trillion dollar deficit and helped plunge the nation deeper into debt, the Montana Legislature must provide a balanced budget when it leaves town.

Since both the governor and legislative leaders say they will not raise or implement new taxes, if the business equipment tax is repealed, spending cuts that exceed what the governor has already proposed will have to be made to keep the budget balanced. The same equation applies to the governor's other priorities, such as higher funding for corrections, a tax break for homeowners on their income tax and spending on K-12 and higher education.

Soon the Legislature's own fiscal experts will present their analysis of Schweitzer's budget—and already there is disagreement over projected revenues, let alone spending. Add in the exigencies created by whatever bills may be requested, the inevitable political posturing for the populace by both the governor and Republican legislators and the fiscal uncertainties grow.

And so the battle for the budget begins. Given there's no love lost between the governor and the Legislature, Montanans are likely to witness a bare-knuckle brawl in the months ahead.

Helena's George Ochenski rattles the cage of the political establishment as a political analyst for the Independent. Contact Ochenski at opinion@missoulanews.com.

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