The ancient Greek philosopher Diogenes is remembered all these centuries later for his habit of walking around in the middle of the day carrying a lantern. When people asked him what he was doing, he'd reply: "I'm looking for an honest man." Well, fellow Montanans, the second half of the 2011 Legislature started this week and the battle royale between Gov. Brian Schweitzer and the Republican majorities in the House and Senate over the budget for the next biennium is about to explode. We should remember Diogenes, because finding the truth in the coming gusher of political rhetoric won't be easy.
As most Montanans know, the Republicans and the governor have a very basic disagreement on whether or not Schweitzer's budget is balanced. Since the Montana Constitution requires that expenditures cannot exceed projected revenues, the seminal questions are: "How much money is state government likely to bring in between now and 2014?" and "How much can government spend?"
The job of coming up with revenue projections lies fully in the Legislature's purview. But Schweitzer is spitting mad that Republicans want to cut government spending to 2009 levels because they don't believe there will be as much future money as the Budget Office says.
Schweitzer has not been subtle about this disagreement, saying the Legislature's projections are always wrong. For their part, legislators feel the same way about Schweitzer's rosy revenue outlook, with Walter McNutt, the powerful chairman of the House Appropriations Committee, telling reporters this week: "We definitely were not enamored of the governor's budget."
Especially troubling for McNutt, who hails from Sidney, are the many fund transfers Schweitzer's budget relied upon to achieve what the governor calls "balance." In particular, McNutt and his fellow Republicans from eastern Montana do not support Schweitzer's plan to take oil and gas revenue away from rural areas and spend it on education statewide. Actually, that shouldn't come as a surprise to anyone, since eastern Montana schools have struggled for years to provide a quality education, as mandated by the state constitution, while relying on a sparse and widely scattered populace for its tax base.
The discovery of massive oil and gas reserves in the Bakken Formation has sparked a boom in production, resulting in millions of dollars flowing to local coffers. Schweitzer says they ought to be divvying up the windfall with the rest of the state. But Republicans, like most Montanans, know well the "boom and bust" of resource extraction cycles and believe it behooves them to just hang on to their bucks for the inevitable downturn. As McNutt put it, he has "heartburn" over Schweitzer's "raid of rural Montana's money."
While in Washington, D.C., last week for the National Governor's Conference, Schweitzer told reporters there was "money in the bank" to cover his budgetary priorities. In an interview with Montana Public Radio, Schweitzer pointedly said if Republicans reduced his proposed spending, it would translate into higher property taxes for Montanans because the cuts to education funding would have to be backfilled by local taxpayers.
But Schweitzer's projected consequences rely on his version of the truth. In reality, the governor's proposed transfer of tens of millions of dollars from the Treasure State Endowment Program (TSEP) will do the same thing—take money that was slated for local infrastructure maintenance and improvement projects for towns all across Montana and toss it in the general fund. The need for those infrastructure projects, which range from drinking water and sewage treatment plants to bridges and solid waste systems, is real. Localities submit detailed applications for the grants and the projects are then competitively ranked statewide. Those with the greatest need and that give the greatest benefit were slated to receive the tens of millions of dollars the governor wants to transfer to the general fund to balance his budget. Without the TSEP dollars, the financial burden of the infrastructure projects falls on local taxpayers, resulting in higher taxes.
Montanans will hear much about whose budget does what in the next two months. Unfortunately, sorting out the truth will be difficult, and determining the consequences of the disparate plans will rest only on prognostications. As citizens nationwide now realize, sometimes predicting the future is not quite as reliable as some economists, bankers and politicians would have us believe. Only a few years ago, who could have predicted that the federal government would bail out Wall Street, automotive giants, banks and insurance conglomerates with taxpayer dollars—or the depth of the recession and the flood of foreclosures that would result? Can we now trust these same people to accurately predict our fiscal future?
The governor says Montana's commodity prices are at "all time highs" and, for at least some commodities, he's correct. Cattle and wheat are rocking, but natural gas is at its lowest level in years and lumber remains deeply depressed with no great hope on the horizon with the housing market still in the doldrums. Tourism projections are, as usual, rosy thanks to our two great national parks, our incredible wilderness and Montana's entire spectrum of natural amenities.
But as we're now witnessing, political turmoil in the Middle East has already caused world oil prices to skyrocket, leading to gas prices nearing $4 a gallon in some areas. No one really knows what the totality of the fallout will be. With consumers holding tight to their wallets, that drive to Montana just might be out of the question if gas hits $5 a gallon.
Like Diogenes, we'll all be "looking for an honest man" in the coming months. Diogenes founded the philosophy of Cynicism, which openly questioned the "truths" of his age. We would be well advised to do the same.
Helena's George Ochenski rattles the cage of the political establishment as a political analyst for the Independent. Contact Ochenski at email@example.com.