Montana Viewpoint


The budget being presented to the governor should not be signed into law

April 21, 2003

At a Democratic leadership meeting with Governor Martz a couple of months ago, the Governor directed a comment to me saying, in effect, “you've got to help us get out of the ’structural imbalance’ we’re in.” Well, Governor, this budget coming to you for your approval is not the way to do it. In fact, this budget is the worst I’ve ever seen as far as fiscal responsibility is concerned.

For those not into governmental jargon, a budgetary structural imbalance is nothing more than a chronically unbalanced budget. Not only do we spend more than we take in, a structural imbalance almost guarantees we’ll do it again next time. In terms of structural imbalance, this year’s budget is the granddaddy of them all. Governor, don't sign it.

There are two reasons to recommend that. First, it is a budget that ignores fiscal conservatism in the hope that the national economy will recover and capital gains tax revenues will not only resume, but exceed, their unprecedented upward pace of 1999 to 2001. To believe that is to paint a rosy picture at best, and a triumph of unbridled optimism over painful experience. While the state’s Principal Legislative Fiscal Analyst predicts 4.44% growth rate in state revenues for 2005, he also predicts the growth would have to be an unrealistic 6% to cover the $140 million structural imbalance built into the budget. That's the assumption the folks behind the budget are using.

Second, if the economic advisors are wrong, the administration will only suffer a loss of prestige, but for some Montanans it will be literally a matter of life or death.

The budget proposal uses about $140 million of one-time revenues to balance the 2004-2005 budget; that’s 6% of total General Fund spending; and a lot in a bare bones budget. Worse, some $90 million of that imbalance will be built into the 2006-2007 budget because of an income tax break that will largely benefit those in the upper reaches of the income spectrum-those who need it least. In fact, 70% of the tax cut benefit will go to those households with incomes over $70,000.

The rationale for the tax break is to change the perception that Montana’s income tax is the highest in the nation. Ignoring completely any arguments to the contrary, and there are plenty, now is the worst possible time to decrease the flow of state revenue. The reality of immense cuts in services to disabled and elderly Montanans; no funding for education when teachers are leaving the state for better pay; and a catch and release prison policy should make that abundantly clear, but apparently hasn’t.

The beneficial result of trickle down economic theory, if it works at all, takes time to happen. The needs of many Montanans are now. It is unconscionable to give those with much, even more, and give those with little, less. It’s also lousy economic policy. The old homily “a stitch in time saves nine” was not coined without reason; problems not addressed now will cost more later. Cutting access to drugs for severely emotionally disturbed people will result in many of them being placed back in state institutions. I can guarantee you that will cost more than supplying them with medication so that they can live reasonably normal, independent lives.

I believe that it is the responsibility of state government to produce a fiscally responsible budget that addresses continuing needs with a predictable long-term stream of revenue. This budget fails that test.


Jim Elliott
Phone: 406-444-1556
Mail: State Senate Helena, MT 59620