Speech
Budget & Accomplishements Address
Remarks of Governor Judy Martz
State Capitol
10/28/2004
Good afternoon and thank you all for being here.
I have invited you to hear first-hand the outline of the Executive Budget that I will submit to the 2005 Legislature.
After more than 9 months of hard work by many people throughout state government the budget is in its final stage except for some minor adjustments that will occur before our required submittal date of November 15th.
As all of you know, preparing the Executive Budget is one of the most important responsibilities one has as governor.
I fully recognize that my successor will want to make his modifications to the budget I am presenting, just as I did four years ago to the one prepared by my predecessor, Governor Racicot.
It is with that in mind that I can’t help but express some disappointment with one candidate who has said he’ll toss this budget in the trash. He obviously doesn’t understand the budget process and the time and effort involved by many hard-working government employees to prepare this document.
I was very pleased on the other hand, to see that Secretary of State Bob Brown understands that you just don’t scrap what’s been prepared with input from every agency in state government.
You don’t scrap 9 months of thoughtful consideration by people who know the laws and needs of the people of Montana.
As everyone familiar with state government knows,
the Executive Budget is the blueprint for state spending, and it serves as a starting point for legislators, when they convene in January.
But, we also know that it is not just one person’s budget. It is the work of hundreds of state employees who have had the opportunity, through the budget and planning process, to put forward their best recommendations for state spending.
I’ll get into a full overview of the budget in a few minutes, but before I do, I am going to take a little time and highlight some of the more significant accomplishments of this administration. As I do, you will also see how many of these accomplishments fit with the current budget, and the one I am presenting.
Keeping Promises – A Record of Accomplishment
Four years ago, I said our priorities were economic development and tax reform, education, natural resources and a quality environment, agriculture, healthcare, public safety and better relations with our tribal leaders.
I AM VERY PROUD TO SAY THAT WE HAVE MADE SIGNIFICANT PROGRESS ON ALL FRONTS.
JOBS: For example, nearly 17,000 new jobs, including over 300 at the re-opened mine in Butte, have been created in the last three and a half years, and unemployment is below the national average. Now that’s progress!
TAX CUTS: And, in just two months, the reductions in personal income and capital gains tax rates that were enacted by the 2003 legislature at our request take effect.
These tax cuts will make it possible for hard-working Montanans to keep more of their hard-earned money, and at the same time, they will provide a real stimulus for existing businesses to expand and create more jobs. And, when out-of-state businesses are looking for a place to relocate, they’ll be more likely to give us a serious look.
Some people were skeptical of our proposal to create the Governor’s Office of Economic Development, but those involved in these efforts know the value of the office, and I want to thank Dave Gibson and his team for their tireless efforts all across the state, and Kurt Alme, who was my Director of Revenue at the time.
I also want to thank Mark Simonich, Webb Brown and the Montana Chamber of Commerce and the Montana Ambassadors for all of their support of our economic development and tax reform programs. We are sending a message that Montana is open for business.
K-12 EDUCATION: In this budget, K through 12 education will receive a first-time ever, inflation funding increase in base aid, and the School Renewal Commission has put forth some excellent recommendations for consideration for future funding by the 2005 legislature.
Lt. Gov. Ohs and Kirk Miller did a remarkable job leading this effort. I am grateful to both of them, and everyone who served on the Commission for their input and serious discussions. Thank you Karl. I also want to thank Kris Goss, who was my Education Advisor and left for law school this fall and Loran Frazier who stepped in and has done a wonderful job.
Over the past four years we’ve made significant strides in our K-12 education. Our students consistently rank in the upper tiers on scholastic tests and our teachers are among the finest, anywhere in the United States.
I was one of the first governors, in fact, I was the first governor, in the nation to raise concerns with Washington over the No Child Left Behind Act, and how one shoe doesn’t fit all, especially for those of us in rural America. The folks back East have been listening and positive changes will be made.
HIGHER EDUCATION: Our University System is in some of the best hands ever with Sheila Stearns as Commissioner and John Mercer as Chair of the Regents. I’m glad to see Sheila, and John here with us today. Welcome.
As you might imagine, it gives me a great deal of personal satisfaction to see the Regents working so closely now with legislators, business, labor and this office on the Shared Leadership Program.
This new partnership will strengthen our colleges and universities for our students, and have a positive impact on our growing economy. I have great expectations for the University System, and the budget I’m presenting will reflect our support for the efforts of the Shared Leadership Program for a Stronger Montana Economy.
You see the best thing we can do for higher education is to continue our hard work on moving Montana’s economy forward.
As more and more better paying jobs are created, our students will have greater opportunities to stay here and work when they graduate, and there will be more revenue to finance our university system, and other government programs.
With that in mind, you will see that the University System budget I’m presenting supports those areas that focus on the most significant ways the system can help strengthen our economy, and boost our economy in our communities.
HEALTH and HUMAN SERVICES: In healthcare and human services, we met with low-income Montanans and their representatives and listened to their concerns.
UNINSURED: One major concern has been the uninsured. The Medicaid Redesign Commission has proposed some excellent recommendations, including one that will make it possible - with a federal waiver - to add thousands of additional children to CHIP, and support our efforts to see that more Montanans have health insurance.
And, the Department of Public Health and Human Services recently renegotiated a very favorable CHIP contract for the state with the Blues, so the 1,300 children we added with federal funds at this time last year, will continue on CHIP for another year.
HOSPITAL FUNDING RELIEF: At the first of three healthcare summits we held, we also proposed a way to increase Medicaid funding for our state’s hospitals.
With Representative Lewis, we made that a reality during the 2003 session, providing $38 million in new revenue to hospitals to treat Medicaid recipients, and help offset the hospital cost-shift to insured patients.
Thanks Gail (Gray) to you and the staff at the Department of Public Health and Human Services for your good work on these issues and all of the many other difficult matters you deal with every day.
METH Watch: From early in this administration, right up until the day I leave, we will push the fight to rid Montana of methamphetamine.
A METH Watch Program was launched this fall with a coalition of retailers, law enforcement and corrections officials, and numerous community groups.
METH Watch will raise the awareness of this killer drug, and help us crackdown on its presence in Montana.
And, I want to thank Jean Branscum and everyone involved in pursuing this program. I pray Jean will become the state’s drug czar to co-ordinate work being done in our commentary.
I also want to thank Bill Slaughter and all of your hard-working employees for the excellent work you do managing our corrections system, which has a big role in dealing with METH and other drug traffickers and drug users.
DUI: We have made excellent progress on dealing with DUI offenders, and I know that 2005 will be the year when the Open Container Act becomes law in Montana.
I just know it. Sometimes it takes a little longer than one might wish to do the right thing, but I know we’re going to get it done next year. Aren’t we!
I want to thank Dave Galt and his staff for their great work on these issues, and many others. Thank you!
NATURAL RESOURCES and ENVIRONMENTAL QUALITY: We have made significant progress in rebuilding our natural resources industries and promoting a healthy environment.
HEALTHY FORESTS: As Chair of the Western Governors’ Association during my third year in office, we led the fight for improved timberland management and passage of the President’s Healthy Forest Initiative.
And, it was a compliment to be the only governor in the United States asked by the President to be at the White House when he announced he would sign the Healthy Forest Act.
MILLTOWN DAM and LIBBY: And, in my State of the State Address last year I called for removal of the Milltown Dam. I know it was a surprise to many people, but it was definitely the correct decision.
I also used Montana’s only EPA Silver Bullet on the Libby cleanup, and I’m glad to know that real progress is being made on that effort, and a funding mechanism is in place to pay for the state’s share.
Jan (Sensibaugh), Bud (Clinch) and Todd (O’Hair), thanks for all you and the people you work with have done on these projects.
ENERGY and POWER TRANSMISSION: Folks, we have coal, lots of it, whether it’s at Otter Creek, on the Crow Reservation, near Miles City, Circle, or Roundup.
The coal is there, as is coalbed methane natural gas, and we can and we will unearth it effectively, and environmentally safely.
Ladies and gentlemen, we need the energy, and our economy will improve as we do more to develop these tremendous natural resources.
This is a national security issue – developing in our own country, owning our resources.
Ed (Bartlett), John (Hines) and Mark (Lindberg), thanks for all you have done on our energy issues.
We must also find the where-with-all to transmit power to the West coast to help solve the nation’s energy and security needs. This is so critical to Montana and our country that I plan to keep working on it after I leave this office.
SNOWMOBILES: My office fought hard to see that everyone can enjoy Yellowstone National Park, not just in the summer, but year-round, so I was delighted that a federal judge in Wyoming recently agreed with us and threw out the Clinton era rules.
Clean and quiet snowmobiles will be in the Park this winter. This is great news for West Yellowstone, our Montana economy and everyone who enjoys the outdoors.
I thank Jim Santoro, my chief legal counsel, for his work on this issue and for his advice on numerous other matters.
AGRICULTURE and LIVESTOCK: Hard work resulted in a new AG facility in Sidney and a multi-million dollar malting plant under construction in Great Falls. Together, these facilities have the capacity to double malt barley production in Montana.
Suffice it to say, jobs are being created and our Ag industry is growing, thanks to the hard work of people like Ralph Peck and his fine staff, leaders in both of those communities and Ag leaders all across Montana. Thank you.
I led an AG and tourism promotion delegation to Japan and Taiwan last spring, and last year I led a delegation to Argentina on a beef cattle genetics and specialty crop trade mission. We now have opened the market for our cattle in Japan.
And while I’m talking about the importance of Montana’s relations with foreign countries, I want to take note of the fact that last December we welcomed Askar Akaev, President of the Republic of Kyrgyzstan, to Montana. Our relationship with the Kyrgyz Republic was launched several years ago between our National Guards, and I’m very pleased that it is now spreading to civilian-to-civilian activities, such as a Farm-in-the-Dell in Bishkek, Kyrgyzstan.
Thanks to Lowell and Susan Bartels, and many others who made the Farm in Kyrgyzstan a reality!
Thanks also to General Mosley and his predecessor Gene Prendergast, and our National Guard for their fine work on this program, and to Chuck Butler, for everything he has done to further this Montana –Kyrgyzstan partnership on behalf of our office.
Now, let me get back to agriculture and livestock.
Over the past four years we presented a strong front to federal authorities on the absolute necessity of maintaining Montana’s brucellosis-free status, and implemented the Interagency Bison Management Plan, and maintained our brucellosis-free status.
Thanks Marc (Bridges) and Todd (O’Hair) for your fine work on this and all issues related to Montana’s livestock industry, and thanks to the Board of Livestock!
NATIVE AMERICANS: From the day I took office, our administration has tried to demonstrate to our tribal leaders a desire to work more closely with them.
I made a point of visiting each of the reservations and last year I participated in the long overdue ceremony at which the site of the Battle of the Little Bighorn was renamed…to be known as the Little Bighorn Battlefield National Monument.
What an honor it was to be in the presence of so many Native Americans and their leaders and their families and friends.
Lori (Ryan) you are an excellent advocate for our Native Americans and I have deeply appreciated your support and knowledge of the issues we face.
GOOD GOVERNMENT is Sometimes Difficult: One of the biggest problems we had to deal with, soon after I took office, was the infamous POINTS system. It was a mess, and it cost us dearly.
But, the good news is that the Integrated Revenue Information System (IRIS) that we instituted is working well, thanks again to the hard work and perseverance of many fine state employees. Because of their efforts, we turned a sorry situation into a very positive story.
Thanks Don (Hoffman), Steve (Bender) and Wendy (Keating), for the great work your staffs did to turn this project around and get it right. I also thank Brian Wolf and Scott Darkenwald, my tech person and previous Administration Director.
I also want to thank Senator Stapleton and the 2003 Legislature for supporting this turnaround.
E-government is a Success: We have also moved aggressively on E-government activities over the past four years. Forty-seven unique E-government services have been developed to serve Montanans, and the state has saved over $l.8 million on development costs of these online services.
And, more and more Montanans are getting online every day to access government. The number of accesses to DiscoveringMontana.com services has grown nearly 50 percent from 472,682 accesses in 2002 to 908,942 last year.
Nationally, Discovering Montana won the 2003 Best of the Web Award for Fish, Wildlife, and Parks. Congratulations to Jeff (Hagenar) and everyone involved in this effort and for all of your work on behalf of those who enjoy our great outdoors.
Consumer Protections: We strengthened protections for consumers and small businesses and helped pass the State Do-Not-Call list. I want to thank Betty Babcock for her work on the telemarketing act. Thank you. Betty. And, we worked with the F-T-C to implement the Federal Do-Not-Call list to help curb annoying and sometimes fraudulent telemarketing calls.
APPOINTMENTS: When I took office, we had no idea there would be, not only one, but two vacancies to fill on the Montana Supreme Court and three district judges to appoint.
As I said earlier, preparing the Executive Budget is one of the most important responsibilities of the governor, and the other is the appointments made to various boards, commissions, the cabinet and the judiciary.
My appointees to the high court, Justices Rice and Warner, have received high marks, as have the lawyers I named to the district courts in Havre, Bozeman and Billings.
I know each of these individuals will have long and distinguished careers on the bench. Needless to say, it gives me a great sense of pride to have given each of them the opportunity to serve the people of Montana in their special roles.
SUPPORT for OUR SOLDIERS: Four years ago, we never knew that nearly half of our Montana National Guard soldiers would be deployed today to fight a war half way around the world. But they were, and they are doing a great job. They are protecting our freedoms here at home and helping those in a faraway land achieve the freedoms that we all enjoy.
As Commander-in-Chief of our National Guard, I have participated in numerous troop deployments and have
talked with their families, and watched as they said their good-byes, and prayed with them for the safe return of their loved ones, just as I did, when Harry served during Vietnam.
And, I attended the funerals of four Montana soldiers killed in Iraq, and it grieved my heart to see the pain in the eyes of their families and friends, but these families, each one picked my spirits up, as they shared that their loved ones believed in what they were doing.
Folks, this is tough duty, but you know what, being governor during this time of war, and serving as Commander-In-Chief of our Montana National Guard has been one of the most satisfying parts of my job. I love our soldiers and their families.
These are brave men and women, and we need to keep them and their families in our prayers, no matter how we feel about the war.
BUDGET: Now, I would like to turn our attention to the budget for 2006 and 2007.
A few years ago we confronted one of the most serious fiscal problems ever to face the state.
But we did the heavy lifting, and because of our sound stewardship of the peoples’ money, we have turned things around. It wasn’t easy, but not much is in this job, which my successor will soon discover.
Today, our state’s fiscal picture is much, much better than it was just a few years ago.
In fact, we have turned an approximate $230 million deficit into an approximate $150 million surplus at the end of the 2005 biennium…and, we maintained Montana’s excellent bond rating, while others suffered reductions.
A year ago some people predicted we would be faced with another whopping deficit, but in my heart I knew they were wrong, and I’m glad to say we were right.
We were right because our economic development programs are working and our tax reforms will have a very positive affect.
When we say we are open for business, we mean it!
In addition to the nearly 17,000 new jobs created and our low unemployment rate, it was recently reported that Montana’s personal income growth was second in the nation during the second quarter of this year. Now that’s progress!
And, University of Montana economist Paul Polzin told the Associated Press last month (9/29/04) that the figures reflect continued strength of the state’s economy. Quote, “The Montana economy has barreled ahead of the U.S. economy during the recession, although the U.S. is starting to catch up.”
But we all know how quickly these things can change, so I have some advice for my successor and members of the 2005 legislature.
Don’t go on a spending spree! If you do, you could find yourselves right back where we were just a couple of years ago.
The budget we are presenting today is structurally balanced. In other words, expenditures are less than projected revenues in fiscal year 2007.
The ongoing General Fund expenditures increase approximately 3.5 percent per year over the 2005 estimated expenditures.
The budget contains a 3 percent increase each year of the biennium for the state employees’ pay plan, and an increase of $46 in Fiscal Year ‘06 and $51 in Fiscal Year ‘07 for the employees’ benefit package.
It also contains approximately $7 million to address the unfunded liability of the PERS and T-R-S retirement programs by increasing the employer contribution to the plans over the next couple of biennia.
PAYROLL, PUPILS, PATIENTS, & PRISONERS: The major factors causing the increase in spending in this budget are: l.) the increase in federal Medicaid match rates and caseloads in the Department of Public Health and Human Services; 2.) the population in the Department of Corrections; 3.) the employee pay and benefit plans; 4.) the inflation increase in the K-12 base aid; and 5.) addressing the retirement liability issue.
Altogether, these account for approximately 85 percent of the increase in on-going spending in this budget.
As you know, over half of the increase in the Fund Balance is one-time money. None of this one-time money is being spent on on-going obligations.
Instead, we looked at expenditures that were one-time only and expenditures that in the future would reduce the demands on the General Fund, and free up on-going revenue.
We have proposed spending approximately $96 million for these projects. They include:
Paying off Debts:
Pay off the Department of Revenue computer system loan - $16 million
Replacing Cultural Trust revenue used to buy Virginia and Nevada Cities - $3.91 million
Completing payments for the Crow Tribe Water Compact Agreement - $9 million
Deferred Maintenance and other Capital Needs - $30 million
Investment in Information Technology Infrastructure:
Department of Revenue completion of IRIS computer system replacement $4 million
Department of Corrections Computer system to track offenders - $l.6 million
Department of Revenue property tax system replacement – $5.5 million
Judiciary Computer System Completion - $l.42 million
Gambling Control computer system - $1.1 million
Preparing for the Future:
Northern Tier Emergency Telecommunications Infrastructure Completion - $4.1 million
Department of Revenue protested property tax reserve - $4 million
Department of Revenue Agricultural land reevaluation - $1.4 million
Montana University system Shared Leadership - $3.94 million
Equipment Needs:
Montana University System equipment for two-year programs- $5 million
Other:
Department of Corrections License plate issue - $4.35 million
And, $1.08 million for other items
The Total for All One-time Only Expenditures is $96.3 million.
With that said, this budget has an ending fund balance of approximately $l50 million. This balance is the largest ever, and over the biennium contains approximately $40 million of on-going revenue and $110 million of one-time money.
This balance will allow the next administration and legislature the flexibility to address other issues that will arise in the next biennium and still have an adequate fund balance left to allow for revenue downturns or other emergencies, should they occur.
I want to again thank Chuck Swysgood and the Budget Office staff and everyone else in state government who had a hand in developing this document.
Those of you here, and everyone else who follows state government, can appreciate how much work goes into this budget.
I also want to reflect for a moment on the cuts we made in the budget presented to me by Governor Racicot and those we were forced to make later, and the ones we made in the 2001 special session.
Governors all across the country found themselves in a similar situation back in 2001, 2002, and 2003. My standing with a lot of folks went south with these cuts, but we did what had to be done, and because of our fiscal management, help from the Republican legislature and the turnaround in our economy, we’re in a lot better shape today.
With the exception of Wyoming, those were not pretty times anywhere in the country. Wyoming, of course, figured out a long time ago how to take advantage of its vast natural resources, which I know we will do too someday, someday soon, I hope.
Since the beginning of 2003, we have cut a total of approximately $105 million of actual expenditures out of the budget, and to suggest that we can now chop another $60 million is doing a disservice to the citizens of Montana, as has been suggested by one candidate for this office.
You can be sure if we were facing another fiscal situation like we did a few years ago, I’d be the first to say we must reduce spending, but we’re not there folks, so let’s don’t go there, not now anyway.
1. I deeply regretted that fiscal constraints made it impossible to provide a raise in the current budget, other than the 25 cents an hour increase that takes effect on January 1, 2005, so I am especially pleased that we can provide a significant increase in pay and benefits to state employees.
2. K-12 education will receive a substantial increase of $17.1 million through the inflationary adjustment that we supported during the 2003 legislature, plus a $4.3 million inflationary increase in special education and $500,000 over the biennium for the Indian Education for All program, as recommended by the Office of Public Instruction.
3. Higher education will receive an on-going increase of approximately $13 million. In addition, the University System will also receive approximately $9 million of one-time money.
As mentioned earlier, you will see that this budget reflects the recommendations by the Board of Regents and the Shared Leadership Program in those areas which will do the very most to improve our economy.
We’re going to fund workforce development, distance learning, which we got a start on last year with some federal money that I allocated for this effort, and agricultural and natural resource development, both vital mainstays of our Montana economy.
All state agencies have solid present law bases, and in some instances, new proposals. This was not the case for the current budget.
Now, before I ask Chuck Swysgood to join me to answer questions on the budget, I have just a few personal comments to make.
Thank You. In the eight years I’ve had the privilege of serving as Governor and Lieutenant Governor, I’ve come to know many wonderful, dedicated state employees.
I want everyone to know how proud I am of our state workers and how much I have enjoyed working with them these past eight years.
All Montanans should have the opportunity of getting to know these people. If they did, I know they would have a much greater appreciation for the great job they do on behalf of all of us who live here, work here and raise our families here.
It gives me great satisfaction that this budget provides for a substantial pay raise and increases in the health insurance benefit allowance for state employees over the biennium. Our state employees have earned it!
I now want to ask my team to stand and be recognized, so I can thank them publicly for their support during the good times and the not-so-good ones. I care deeply for each of you and want everyone to know what a great job you have done.
Barbara, you’ve been a great Chief of Staff, and Lynn, I don’t know what I would have done without you.
Tom has been a great Policy Director. I’m glad we got him back to Helena. I’ve already told you how much I appreciate the work of Jean, Todd, Jim, Chuck, Loran and Lori. Thank you and everyone in the office. And, Chuck Butler, thank you for all you have done!
I now want to thank my Cabinet without whom our accomplishments would not have been achieved. You have been outstanding. Please stand, so I can recognize all of you.
Now I want to say a few words about the Capitol Press Corps, but you don’t need to stand! You report on what we do and what we’ve done, and while we may not always agree, you do good work.
As everyone here knows, a few of these reporters were here when we came into office, and they will be here when we’re gone. Their institutional knowledge of what goes on in state government is incredible. Don’t ever forget it! I won’t!
I also want to thank the many lobbyists and association executives who spend a good deal of their time in this great building and in meetings with people throughout state government.
To your critics, all I can say is, get to know these people, and you will appreciate what they do.
They too are part of the process, and they do their jobs well!
And to my friends in the legislature, thanks for passing so many of the programs we put forward during the two regular sessions and one very difficult special session we had together.
Our legislators, Republicans and Democrats, do a good job for the people of Montana. We may not always agree, but we all try to do what’s best for the people we serve, and that’s what counts most.
I now want to express a special thanks to Lieutenant Governor Karl and Sherrie Ohs. They were with me four years ago, when we began this journey and they’ve been great friends and supporters ever since.
Karl, you have left your mark both in the legislature and in the executive branch and I want you and Sherie to know how much I appreciate your friendship.
Serving as Lieutenant Governor is not the easiest job in Montana, as you and I and others who have served in the position learned. Those who follow will learn the same thing. Won’t they!
Finally to my family, you have been very kind to share me with the people of Montana for the past eight years, and a couple more, when you count the campaigning. I am looking forward to spending a lot, lot more time with Harry and each of you, and to enjoying to the fullest being a grandmother to Remy.
God bless and thank you all from the top of my head to the bottom of my feet. None of this would have been possible without so many good friends and dedicated colleagues. You are the best.
It has been an honor and a privilege to serve the people of Montana for the past eight years.
It will soon be a pleasure to join a distinguished group of Montanans in the Former Governors’ Club.
Thank you and God bless.
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