HELENA – Gov. Brian Schweitzer finalized about $40 million in state government budget cuts on Monday — but said he would release several million dollars in local stimulus grants that had become the focus of tense disputes with local officials.
Schweitzer said key tax collections have increased for two months in a row, providing a glimmer of hope that the state budget picture is improving. That news, along with an expected $86 million windfall from a coal deal, prompted him to release the grant money.
But it wasn’t enough to fend off budget cuts across state government recommended by his budget director. Schweitzer endorsed nearly all of them, except for about half a million dollars in services for the disabled.
“Most of the rest of the suggestions will remain intact,” Schweitzer said.
A lawmaker who was one of the first to raise an issue with the freeze on local stimulus money welcomed the governor’s decision.
“I know we have to cut the budget, but I didn’t like the idea of cutting those little jobs projects,” said state Sen. Dave Lewis, R-Helena. “We have a chance to put a few people to work, so I am glad he released the money.”
The cuts will still cancel promised rate increases for providers of services to the needy. Nursing homes, physicians and others unsuccessfully argued the money is needed to continue providing help.
The plans calls for some cuts in every area of state government.
The governor did modify a proposal to cut almost $400,000 from one private drug treatment center in Boulder, and instead spread the amount around treatment services across the prison system.
Analysts have said a $2 million reduction in school district block grants would trigger through existing law an automatic, although small, increase in local property taxes to make up some of the difference.
Schweitzer said Monday he disagrees that it would do so.
A bipartisan panel of lawmakers asked Schweitzer last month to reconsider all of the cuts if more federal money came in. But Schweitzer, a Democrat, said he needs to reduce ongoing programs, regardless of one-time windfalls like the $86 million expected to come in shortly from a recently inked deal to lease the Otter Creek coal tracts to Arch Coal Inc.
“We don’t think one-time money should be used to fund ongoing programs,” Schweitzer said.
The governor said most families and small businesses have cut back during the recession and the state should follow suit.
The governor has taken some heat for first freezing $3.5 million in local stimulus money and a similar amount in historical preservation grants — and then linking its release to support for coal money and stimulus spending.
Local officials said the governor was playing political games with the money.
But Schweitzer said the criticism had nothing to do with his decision to release the money without preconditions.
“No, not at all,” he said.
The governor said the trigger point for him was the increase in corporate tax collections in March compared with the same period last year.
Budget Director David Ewer said he believes the worst of the recession has hit tax collections, but he still cautioned that lawmakers meeting next year will be facing difficult decisions because the drop in revenue has been steep.
All of the governors’ moves have been aimed at avoiding a deficit next year.
The Legislative Fiscal Division estimates the cuts, along with related transfers, have the potential to put the state back into the black by roughly $30 million at the end of the two-year budget period in the middle of 2011.
The administration said the state had a little more then $200 million in the bank as of Monday.
“The glass is more than half full,” Schweitzer said.