Amid spending concerns, budget advances, major new trust proposed

Yahoo

15-04-2025

Photo illustration illustration by Getty Images.
Montana's big budget bill, House Bill 2, is headed to the full Senate after bulking up in the Senate Finance and Claims Committee, as is a separate proposal for a beefy new trust fund.
The debate over spending is taking place alongside a discussion about how the state can keep paying for its needs — and whether legislators can keep adequate oversight and control over state dollars.
Friday, Senate Finance and Claims voted 13-9 to approve HB 2 after passing several amendments that added to its bottom line, and it will likely be on the floor Thursday.
Sen. John Fuller, R-Kalispell, said HB 2 was costing a lot more for the 2027 biennium than the 2025 biennium, and he would be opposing it.
'My constituents did not send me here to spend 18% more than we did two years ago,' Fuller said.
But Sen. Jonathan Windy Boy, D-Box Elder, said he expected to see other proposals that would add more money to HB 2, and it was time to move the $16.6 billion legislation out of committee.
'I think that we need to use this as a cutoff, at least for now, slow it down a little bit,' Windy Boy said.
Some legislators want to slow down House Bill 924, too. Sponsored by Rep. Llew Jones, R-Conrad, the controversial piece of legislation would create a new trust fund for Montana.
Jones said the bill collects a lot of small funds that already existed — and people figured out how to raid — into one trust.
He said that fund will earn money for Montanans for generations to come in housing, childcare, disaster resiliency and more.
'This is kind of a Montana-made legacy and investment in the future,' Jones said.
Detractors, though, fear it was rushed into existence and loosens the grip legislators have on their ability to appropriate funds.
On the House floor last week, Rep. Terry Falk, R-Kalispell, said he'd never seen a larger fiscal note than the one for HB 924.
The bill initially directs $679 million from the general fund into the trust.
Monday marks day 74 of the 2025 session, the Montana Legislature has 90 days to complete its work, and both bills are progressing.
At this point in the session, the state budget sometimes looks like it won't pencil out, with numerous proposals to reduce income and property taxes still in play, and plenty of spending bills alive.
On top of that, prior to the session, a report from the Legislative Fiscal Division warned of the risks of recession and potential federal cuts.
It said continued income tax reductions and spending pressures raise a question about whether the governor's proposed budget will mean income can match expenses by the 2029 fiscal year.
'Decisions of this magnitude will be made by the 2025 Legislature and will set up Montana's state finances for success or failure for decades to come,' the report said.
The most recent calculation of bills in play by the Legislative Fiscal Division shows ongoing expenses outpacing ongoing revenues by 2026, and a gap of $500 million by the 2029 fiscal year.
However, the Legislature won't pass all the bills that reduce income, and it will kill some of the spending ideas, although in a debate last week on the House floor, Falk said he's worried by the trend.
'Even just the last few days, the line between structural deficit and breaking even has gotten quite a bit worse,' Falk said.
In a press availability Friday, Sen. Christopher Pope, D-Bozeman, said HB 2 is large in part because legislators want some ideas to stay in the mix, but only for the time being.
'There will be a reckoning, and there has to be a reckoning,' Pope said.
Jones described HB 924, the Growth and Opportunity Trust, as an opportunity for the legislature to have a significant and positive impact on Montanans for decades.
The bill, which received bipartisan support and opposition with a 53-44 final vote in the House, is a combination of several proposals the Montana Legislature had already heard, Jones said.
He said the trust 'is a kind of a conservative, forward looking trust' that takes a portion of volatile revenues and 'turns them into long-term assets.'
Montana has a coal trust, but Jones said it's worth only about $1.2 billion, while other states have tens of billions of dollars in similar trusts, such as Alaska, with $80.3 billion, and Wyoming, with $11.6 billion.
The Montana trust fund would take in about 50% of volatile revenue, such as income from capital gains. He said half of the trust would reinvest funds, and the other half would distribute funds.
A fiscal analysis of the bill said allocations would go to local disaster resiliency, state property tax assistance, water development, bridges and early childhood programming.
Jones said the principle is protected, and withdrawal would require a two-thirds vote by the legislature. He said the bill allows Montana to store money, but it includes recession triggers for hard financial times.
'This is the acorn,' Jones said of the bill. 'I'm hoping it will grow into an oak tree.'
Although the bill passed to the Senate, it elicited criticism from both Republicans and Democrats on the House floor.
Falk said the bill came much too late in the process given its heft and complexity, and he would have liked such legislation to be thoroughly vetted by the Legislative Finance Committee.
'If we're taking tax revenue that creates a surplus, and it's too high, I think we need to give it back to people,' Falk said. 'We don't even give them interest on their money.'
Rep. Jane Gillette, R-Three Forks, said the bill allocates money for specific purposes in advance, and she wasn't sure legislators should box themselves out of future decisions that way.
'What this bill does is it takes away from your ability to spend future funds and ties the hands of future legislatures,' Gillette said.
Minority Leader Katie Sullivan, D-Missoula, said she liked the idea of being able to save money and prepare for the future.
However, Sullivan said she had concerns both about the authority the governor's office has to reduce the size of transfers and how the bill reserves a portion of future income tax revenue.
She said the structure gives away some legislative power and oversight in the appropriations process.
'The legislature is in charge of appropriations, and we should keep doing our job in that space,' Sullivan said.
Sullivan also said property tax rebates proposed in the bill amount to just $40 for residents, and 'we need to amp that up so it's meaningful for taxpayers.'
Jones agreed that property taxpayers need more help, but he said the only way the executive can touch the funds is during emergencies as outlined with specific language and set triggers in the bill.
In support of the bill, Rep. Jonathan Karlen, D-Missoula, said it might not be the way he would write it, but it would make a difference for Montanans.
Karlen said legislators don't always have the chance to take up bills that affect their constituents for generations to come.
'What's in this bill is an ongoing, fiscally responsible way to support pensions, housing, critical infrastructure, water, our early childhood system,' Karlen said.
The bill will have a hearing Tuesday in Senate Finance and Claims.
HB 2 is expected to be on the Senate floor later this week, and the most recent report said the legislative proposal is 0.7% more than the governor's budget.
In the meantime, a plan still needs to gel for a property tax decrease for residential payers, and an income tax reduction is expected too.
Falk said he's only in his second session, but he thinks every session, projections show a negative structural balance 'in the out years.'
'I think this is worse — way worse — than normal,' he said.
He said legislators will make reconciliations, erasing here and there, and the governor may veto some spending, but he sees the need for work ahead.
Pope sees work ahead as well.
He said he is proud of the work Democrats have done on their priorities, at times with help from nine Republicans in the Senate, whether it be increasing provider rates or help for housing.
At the tail end of the session, he said, the legislature is entering the firefight.
'We have to not only keep pursuing the things that remain undone, and there's a fair amount of that, yet we also have to circle back every half hour to protect something that's already been decided, and it can be harrowing,' Pope said.