April 14, 2003

If I were a cynical person, I’d call the budgeting process the Montana legislature has used for the last fourteen years “budgeting from election to election.” The idea of funding government on an ongoing basis rather than year to year crisis management seems alien to most legislators.

The major problem with Montana’s finances is that we constantly spend more than we take in. Common sense would tell you there are two ways to deal with that: spend less or tax more. But even Republicans seem to be reluctant to cut education and social services any deeper if past and present budgets are anything to go by; they’re even more reluctant to raise taxes, and in fact, are still cutting them at a time when we are $230 million in the hole.

But while common sense may tell you that there are only two ways to budget this mess, you’ll be glad to know that the legislature has a third way; the use of “one-time money.” “One-time money” is money that becomes available for spending in one year only. After that you’ve got to find something else to use. It can be all kinds of things: capital gains taxes from the sale of the Montana Power Company, Tobacco Settlement payments, the Coal Trust, or taking money from the Workers’ Compensation Fund.

There’s nothing wrong with using one-time money for one time spending. If there is an expense or need that seldom arises and needs paying, then using one-time money’s OK. Where we run into big problems is when we fund ongoing expenses with one-time money. This is what we have done for years. If we don’t cut spending in the next budget, we’ll have to find a replacement for that one-time money. That means taxes.

Even worse, we’re beginning to take money from places that should be untouchable, like the Workers’ Compensation Fund. It’s bad enough to spend windfalls on a temporary basis; it’s dangerous to take money from reserves. Reserves are put there for a purpose, and it’s not to bail legislators out of budget messes. Eventually you dig a budget hole so deep the walls collapse. I think we are now at that point.

Paying for things as you go is not a new idea in budgeting, but it sure seems radical to legislators. If you have a long term need, like funding education, then dedicate the appropriate amount of revenue towards funding it year after year. I’d say run government like a company, but that concept has gotten kind of tarnished of late. Big business and government seem to be sharing the same short-sightedness when it comes to running the show.

Every legislative session has a cliché that becomes a mantra. This session’s is “predictability and stability.” It’s a great concept; now let’s apply it to the state budgeting process.