With barely an increase in revenue, a sluggish economy and increased costs, how can Montana balance their budget without making cutbacks or increasing taxes? Governor Schweitzer’s proposed budget manages to do all of the above, but how? And is it legal?
First of all, his budget will spend more than it takes in, which means it is not structurally balanced. His budget relies heavily on various pots of one-time money in order to “balance” but the next Montana governor will not be able to rely on that money and will likely be left with quite a mess. $95 million dollars of one-time money will be added to the general fund in his proposal. This money is in large part, from the coal tax fund which is typically used for local government grants.
By essentially stealing money from oil-rich school districts and giving it to the poorer schools, Schweitzer is able to punish the districts for their fiscal conservatism while rewarding those who can’t manage their money in order to pay for his proposed $38 million increase in education funding.
He also plans to provide state employees one and three percent raises over his two year budget. Ever the trickster, his budget only needs to pay for 6 months of the 3 percent increase as he proposes it take place in January of 2013. He is also proposing tax breaks for many businesses and homeowners. $28 million will come from enhanced crackdowns on those he and the Department of Revenue feel aren’t paying enough taxes. Sounds lovely. Get a tax break, receive an audit.
Republicans want to fix the state’s troubled pension funds but Schweitzer failed to address this in his proposed budget. Although Republicans can rewrite Schweitzer’s entire budget, it ultimately requires his signature so it will be interesting to see how it all plays out. Montana requires a balanced budget, does one that is structurally unbalanced really fulfill that requirement?