Speech
Billings Chamber Newsmaker Forum
Remarks of Governor Judy Martz
Billings, MT
12/13/2002
Good afternoon. I so much appreciate being here for your December Newsmaker Forum.
I just returned last week from the winter meeting of the Western Governors Association.
[personal anecdote about WGA]
I’d like to recognize an individual who has joined me today. Chuck Swysgood, will you please stand and be recognized?
[personal anecdotes about Chuck]
Folks, I want you to know that each and every one of us is fully in support the goals of the Chamber. I know that times are tough and money is tight… we’re facing the same situation in Helena… but working together, we will get through these tough economic times with an eye toward better things to come.
Today, I’d like to spend some time letting you know about our budget, the upcoming legislative session and our tax proposals.
On November 15, as required by statute, we presented a balanced budget proposal for the state legislature’s consideration.
As I said on the day I announced the budget, I wish I could have said that Montana’s economy was strong and tax revenues were rolling in. I wish that good-paying jobs were available for every Montanan and that we had enough money coming in to our state’s coffers to fully fund our programs.
Unfortunately, that is not the case. With a two hundred forty million dollar deficit, this is the most challenging budget crisis our state has faced in sixteen years.
So, why are revenues down? Just like the rest of the nation, in the 1990’s we saw stable, modest economic growth in Montana. However, across the nation, economic storm clouds began rolling in around the summer of 2001, as our nation entered a recession.
While Montana was not as hard hit as other neighboring states like Idaho and Washington, we still felt that recession, and we continue to feel its impacts today.
It is projected, and it is our sincere hope that the economy will turn in the next 2 to 3 years, however we must build our budget based on current revenue projections.
Today, I will highlight a few key areas of the budget we announced.
[Overall Parameters]
As Chuck and his staff began preparing this budget, I outlined for them a number of key parameters.
First, I asked that they not raise taxes on Montanans who are already 46th in per capita income. Our residents cannot afford higher taxes. Our economy cannot afford higher taxes.
Many think I have made this decision because of a pledge I signed. They are wrong.
I made this decision because I believe it is right in my heart. I do not believe that we should raise taxes on Montana families when many families aren’t making ends meet.
They are struggling already, and many still cannot afford health insurance, let alone pay higher taxes.
I don’t believe we should raise taxes on Montana families in a recession, and my budget reflects that belief.
I believe that when times are tough, we all have to tighten our belts. Just like families have to prioritize when the paychecks aren’t covering all expenses, state government must operate in the same way.
The second parameter I outlined for the budget office was that they minimize the impact to Montana families and those in need as much as possible. A number of program reductions initially proposed by agencies were simply unacceptable to me.
Given the size of the potential deficit, the cuts that would be needed to balance our budget without any additional revenues are just too deep, and hurt too many people.
As Governor, I cannot tolerate that level of hurt.
So, let me outline the programs that I asked be restored from initial agency proposed reductions.
[Health and Human Services]
Health and Human Services are a key part of the economy in Billings and throughout Montana. The services funded by state and federal government are often the only opportunities that some individuals have to access health care.
Over the two weeks leading up to the budget announcement, we held human services roundtables throughout Montana. One of them was held right here in Billings.
I wanted to take the budget discussion to those most impacted by the proposed budget reductions. I wanted to hear their creative ideas – and to see the programs we provide from their perspective.
Just like those participants, I too care, and grieve that the reductions proposed would mean a change in the level of services provided by state government.
I want to thank all of those who took time out of their busy schedules to join me at those roundtables. As we built our human services budget, your recommendations were taken into consideration.
These are some of the programs that I required would not be removed from the budget.
[Breast and Cervical Cancer treatment]
I asked that the breast and cervical cancer treatment program funding be continued in the next biennium.
This program compliments the screening program that already exists.
[CHIP and other programs]
In other areas of health and human services, I required that the funding for the Children’s Health Insurance Program or CHIP be held harmless.
The Montana Chemical Dependency Center chemical treatment facility in Butte will remain as is.
I required that Medicaid pharmacy benefits for the medically needy be restored.
I required that services for children with developmental disabilities, commonly called the Part C program, be restored.
And, I required that the funding for foster care services, including tribal contracts, be held intact.
In addition, our budget also restores several provider rate reductions that had initially been recommended.
[Education]
We also looked closely at our state’s K-12 education budget.
Education is and has always been one of the top priorities of our administration. In these difficult times, we must work together to strengthen Montana’s excellent education system while living within current budget constraints.
One reflection of the interest in public schools during the interim was the Governor’s Public School Funding Advisory Council. This group held hearings across the state to find solutions for K-12 funding concerns.
These are the people’s recommendations and they received the highest consideration in preparing the budget.
Quality schools are a priority for the Administration. This budget reflects that importance. We recognize that it is easier to maintain a quality system than it is to build one.
Our children are the future of this state. We are well recognized for providing a top quality educational system for our children. And I made a commitment to keep it that way.
My education budget recommendations are consistent with a balanced view of all services provided in the state.
One of the programs we added to the budget was a proposal to repay student loans – up to three thousand dollars per year for four years – to teachers who stay and teach in state.
In addition, we provided the legislature with a proposal to address declining enrollments in the state’s rural schools.
Enrollments are dropping in many schools across Montana.
As student populations drop in school districts across the state, the costs to keep the school in operation often increase. Due to the fact that Montana bases school funding on enrollment, many schools are struggling to maintain quality in the classroom with limited dollars.
Our proposal will average the enrollment increases and decreases of all school districts over a three-year period. This will help Montana’s schools pay for the quality our students deserve.
Because of the cost of many of the programs I outlined above, we would have been left with a $36 million dollar negative ending fund balance. In order to address that negative fund balance, I asked the budget office to propose a solution.
We are asking the legislature to transfer up to ninety three million dollars from the permanent coal trust to restore the depleted general fund balance in fiscal year 2004.
This proposal will leave our budget structurally balanced in fiscal year 2005, without tax increases on hardworking Montana families.
I cannot begin to describe what an incredibly difficult and heart-wrenching process this has been.
No, we were not able to save everything we wanted. But we feel we were able to save what means the most to people. We listened and have acted in the best interests of our residents under these financial circumstances.
The reductions that are proposed are not reductions we would like to propose. It was our goal to reduce those impacts to the greatest extent possible.
Our task is not complete. We will work closely with the both sides of the aisle to pass a budget that provides services to those most in need while not living outside our means.
At the same time we will continue to work tirelessly to see our economy bring more and better-paying jobs, tax reform and a strong education system for our kids.
[Property Taxes]
And on that note, I’d like to share with you our plans in terms of taxes in the upcoming session. Because, although we do not support raising taxes, there are other proposals we will be bringing forward to shift our tax burden for economic development, and to address property tax reappraisal.
First, let’s talk about the upcoming property reappraisal. Some of you may have seen stories that ran last week highlighting the increase in land values that has occurred over the last six years.
Depending on where you live in the state, these increases in value can be quite substantial.
Let me make this point perfectly clear – our administration is committed – no ifs, ands or buts about it – to mitigating the impact of property increases as much as possible. We’ll have to work with the legislature to get the job done, but I know I can count on the support of those legislators in this room and others to ensure that property tax increases impact your bottom line as little as possible.
We simply will not tax you out of your homes. Not on my watch.
As part of that commitment, we have created an advisory council to review the results of the current reappraisal. They will study the new property values established by the reappraisal, and will offer recommendations to address and mitigate any impact on Montana’s property owners.
By working to address any tax impacts resulting from the reappraisal, I am confident that we will continue to strengthen opportunities for every Montana community and every Montana family.
[Administration Tax Plan]
On the subject of taxes, I want to outline for you today the tax plan our administration is proposing to the legislature.
This plan has been discussed for months, as the three advisory councils I appointed in April met throughout the summer and fall.
We are confident that this plan provides the best opportunity to create an environment where real economic growth can occur in our state.
I am often asked why we place such a high priority on taxes.
Simply put, businesses can pick to locate anywhere in the country – anywhere in the world, for that matter.
We want our tax structure to help bring them here.
But our current tax structure just doesn’t cut it, in fact, it drives them away.
Right now, we have the one of the highest capital gains tax rates and the highest stated income tax rates in the nation.
Our plan will lower capital gains rates to encourage businesses and entrepreneurs to locate in Montana, and will lower capital gains rates to encourage more investment in Montana.
Our plan will lower personal income taxes an average of ten percent for all Montanans – so you can keep more of what you earn.
Ninety-three percent of our income tax is paid by Montanans, versus only seven percent paid by non-residents. We need to share more of our tax burden out of state, like other states do.
Our plan will do just that… with a sales tax limited to certain items. A limited sales tax won’t impact our tourism industry. When was the last time a state’s sales tax influenced your decision to go on a vacation?
By sharing the burden with nonresidents, we will lower taxes on hardworking Montana families – without lowering the amount of money that goes into the state bank account.
And, our plan will provide the opportunity for communities to relieve the property tax burden on their local residents, while addressing infrastructure and economic development needs through a voter-approved local-option tax.
Our tax plan, our reappraisal plan and our budget are about more than change. They’re about restoring hope.
They are about keeping our kids and grandkids here. They are about good-paying Montana jobs and a better future for Montana families.
And that’s something we can all support.
Thank you again for allowing me to join you.
Good afternoon, and God Bless.
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