The state of Montana has a dire budget situation that requires leadership to repair. In 2013 the state of Montana had an ending fund balance of about $537 million and it will be down to $79 million this year. The ending fund balance is our monetary cushion for our state should it be necessary between legislative sessions every two years. For reference, we need about $200 million in the ending fund to be structurally solvent, so this balance is very troublesome. Instead of leadership on tough cuts to replenish the ending fund, we are getting a budget shell game from the Governor.
In a shell game the dealer puts a ball under three cups and moves them around, trying to dupe the spectator into guessing which cup has the ball when the slight-of-hand is finished. Budget shell games can take on many forms: one-time transfers, fund switches, off-balance sheet fluctuations, etc.
Budget tricks are boring and hard to understand. Newspaper journalists have a hard time explaining them in easily relatable terms, so readers are unknowingly uninformed. But budget tricks have a disastrous effect on real people. Pensions get gutted, people lose their savings, jobs get eliminated, taxes skyrocket.
Buried in his budget proposal Governor Bullock identified a ‘one-time transfer’ of $83 million dollars to be paid from the coffers of the local and state infrastructure funds (see page 9, Legislative Budget Analysis, 2019 Biennium). Simply transferring dedicated dollars from local and state infrastructure projects into the general fund is innocuous, the executive branch claims. There is nothing to worry about, they’ve said, please look the other way.
Not so fast. What about the infrastructure funds that got raided? Don’t they need to be replenished? The loser here are the several local Montana towns that need these funds to pay for their projects.
This is no different than a husband (executive branch) and wife (legislative branch) that decide to set aside $100 of cash in an envelope to be used for weekly groceries (local infrastructure fund). The husband then takes $50 out of that envelope and goes to the bar (general fund). Then he returns to his wife and says “groceries (infrastructure) are essential, we must pay for them on the credit card (bonding), otherwise the kids won’t eat.” If the husband wanted to pay for the bar tab, he shouldn’t have raided the grocery fund and then claimed groceries to be essential. The net result is $50 of debt for the family.
Now add millions of dollars to this analogy and you have the Governor’s trick. The truth is that this simple $83 million ‘one-time transfer’ saddles the state of Montana with millions more of debt just to cover an existing operational shortfall. It will not fund new projects. Though bonding may be a good plan for new large-scale infrastructure projects, this current budget trick is to cover up the Governor’s near-term deficit, and, in the process, jeopardizes future infrastructure works.
Several Democrats close to the budget have expressed privately the political dangers of robbing Peter to pay Paul. They realize, rightfully, that the Governor’s short-term budget games could jeopardize the long-term infrastructure needs of Montana.
We owe it to construction workers and local governments to be transparent and honest, they are the ones that could get hurt. The people elected us to be good stewards of their money, not to transfer from one fund to another fund just to cover up a deficit and make the Governor look good.
Republican leadership is committed to funding essential infrastructure. Our calling is to look out into the future and build a long-term sustainable plan for Montana’s infrastructure needs. We will fight to make this happen.
By: Representative Jon Knokey
Jon Knokey represents Bozeman. He has a Master in Public Administration from Harvard and Masters in Business Administration from Dartmouth. He graduated from Montana State with a B.S. in Business. Jon Knokey played quarterback for the Bobcats.