HELENA – The governor’s office said Tuesday that more of the federal stimulus money needs to be funneled into basic government services in order to keep reserves intact.
But Senate Republicans signaled after a committee hearing that they plan to cut basic spending in order to balance the budget while retaining large projected reserves.
Budget Director David Ewer said the state’s fiscal picture has deteriorated from last month. He told the Montana Senate Finance Committee, looking at the roughly $900 million federal stimulus plan, that about $45 million more in discretionary money needs to be spent on basic state services.
That committee plans to start making decisions Thursday and Friday on the main budget, House Bill 2, and the stimulus spending plan, House Bill 645.
Ewer said it is acceptable to use the federal money to backfill primary government services since government stabilization is an approved use of the money.
“We need to restore maintenance money from the federal government, that is why they are sending it,” Ewer said.
In an interview, the budget director highlighted one stimulus area the governor’s office would like to protect — $18 million for a college tuition freeze — but said he would not dictate exactly where the $45 million should be pulled from.
“I deliberately left that to the Senate and the House,” Ewer said.
House Bill 645 spends about $880 million of federal money. The state has discretion with about a third of that, while the rest was sent by Congress to specific areas, such as $220 million for roads and bridges. Current legislative priorities, passed by the House, go to such areas as local infrastructure projects and education.
Ewer said projections based on the most current spending plan show state reserves at the end of the two-year budget period will be about $45 million less than the $250 million sought by the governor.
Republicans in control of the Senate also want to keep the large projected reserve intact.
But Sen. Keith Bales, chairman of the Senate Finance Committee, said in an interview that they are more likely to cut spending from House Bill 2 than use stimulus funding to backfill the general government budget.
He said GOP lawmakers are looking at trimming most areas of the budget, including education, human services, corrections and state agencies. Bales said one way to trim $5 million would be to cut all new employee positions from the budget.
“None of the cuts are going to be easy,” Bales said.