Speech
Budget Reductions and Call for Special Session
Governor Judy Martz
State Capitol
6/28/2002
Good Afternoon.
At this point in our state and nation’s history, we are facing very difficult economic times. We are a nation at war. We are also a nation that is reeling from a national recession.
Montana joins states across the nation that are working to address declining state government revenues.
As income and corporate tax returns have come in throughout the spring, we have seen a trend toward increased refund amounts and lower tax payments. This indicates a loss in income for both individuals and corporations in our state.
Based on current projections, we have fallen well short of the revenues projected by the legislature in the 2001 session.
As you know, the Governor’s office has a statutory obligation to reduce budgets, based on MCA 17-7-140, which states that: the Governor’s office shall direct agencies to reduce spending in an amount that ensures that the projected ending general fund balance for the biennium will be at least 1% of all general fund appropriations during the biennium.
Yesterday, I met with Budget Director Chuck Swysgood regarding budget shortfalls and his recommended budget reductions.
[Implementation of Agency Reductions]
Based on his recommendations, as well as those of the Revenue and Transportation Committee and the Legislative Finance Committee, I am asking that all agencies immediately implement the reductions that were recommended by the Budget Office on May 24 and June 13.
These reductions, along with general fund balance transfers of fourteen point six million, total an average of three point five percent (3.5%) across the board or approximately thirty-eight million dollars. Our budget office worked closely with the respective agencies to identify those reductions.
You will find a copy of those recommendations in your press packets.
Yesterday, the budget director reported to me that, based on current revenue projections of June 27, we must reduce spending further by forty-five million dollars to meet our statutory requirement.
As we look for ways to further reduce budgets, it is important to remember that the administration’s statutory obligation comes with certain caveats.
First, our reductions cannot exceed ten percent of the general fund budget for any one agency or program.
Second, our administration does not have the authority to eliminate entire programs. Only the legislature can complete that task. And third, when making reductions, our administration only has the authority to reduce a limited amount of general fund expenditures.
[Special Session Call]
Given the level of reductions that we are now faced with, my budget office recommended, and I concurred, that there is no way that our administration can recommend the level of reduction needed while remaining within the statutory parameters outlined.
Based on current information, I am calling the legislature into special session to address revenue shortfalls. The session will begin on August 5.
The call is included in your packet. I would like to highlight the items within that call that outline the specific parameters within which the session is called.
I direct the Special Session of the 57th legislature to consider action limited to the following subjects:
1 – Legislation approving fund balance transfers as submitted by the Office of Budget and Program Planning.
2 – Legislation reducing general fund expenditures, including general fund expenditures exempted by section 17-7-140 MCA, House Bill 2, any other appropriation bill, statutory appropriation, or language appropriation.
3 – Legislation reducing non-general fund appropriations and non-budgeted transfers when the reduction will increase the general fund balance and any necessary statutory amendments to effectuate the legislative reductions.
4 – Legislation reducing the general fund shortfall in revenue, and;
5 – Legislation amending House Bill 41 and Senate Bill 495 to provide for a guarantee account in the state special revenue fund.
I commit that our administration will work with the legislature to make the right decisions for the people of Montana. At the same time, we will work with agencies to also identify potential further reductions. Montana will have a structurally balanced budget.
These are painful decisions that affect everyone’s lives. I ask the legislators to consider reductions that have the most limited impact possible while at the same time assuring that the state remains fiscally responsible.
Thank you for being here today, and I will now open the floor for questions.
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