HELENA, Mont. — Montana Gov. Steve Bullock said Wednesday that the state budget is back on track nearly a year after his administration projected a huge shortfall, and that some funding that had been cut will be restored to health programs for the elderly and disabled.
The governor also announced that private prison company CoreCivic agreed to a two-year extension of its contract to run the Crossroads Correctional Center in Shelby, a deal that will add another $34 million to the state treasury.
State agencies have gone through multiple rounds of cuts over the past 1½ years as tax collections fell below spending and depleted the state’s cash reserve. In August, during the most expensive fire season in state history, Bullock budget director Dan Villa projected a $227 million budget shortfall, prompting a special legislative session last fall that resulted in more than $70 million in spending cuts.
Since then, revenues have picked up and have come in higher than the Democratic governor’s projections for the fiscal year that ended June 30. That will trigger the return of about $45 million to state agencies that went through budget cuts, primarily to the hard-hit state Department of Health and Human Services.
Bullock told reporters that the first cut to be restored will be to the reimbursement rate paid to nursing homes, assisted-living facilities and other providers that care for Medicaid patients. That reimbursement rate was cut nearly 2.99 percent in January, saving the state about $3.5 million annually. The cut prompted a lawsuit by the Montana Health Care Association and several nursing homes that said it was made illegally and forced some facilities to reduce services.
Montana Health Care Association executive director Rose Hughes said her organization won’t drop the lawsuit.
“All we have at the moment is an announcement at a press conference,” Hughes said. “There are still a lot of other issues involved in the litigation.”
Funding also will be restored to case management programs for the developmentally disabled and mental health, while the allocation for rest of the $45 million will be decided by Sept. 1, Bullock said.
In announcing the plan, Bullock repeated his assertion that the state’s financial problems were largely driven by a Republican-led Legislature that over-inflated the revenue estimate used to write the two-year state budget. He called for changes to the revenue-estimating process that involves more collaboration with the governor’s office, instead of a legislative committee unilaterally setting the forecast.
“As governor, (I) did what needed to be done during this period, which was challenging and in many respects — also from my perspective — unnecessary, had I had a little bit more willing dance partner to address some of these issues,” Bullock said.
Senate Majority Leader Fred Thomas, R-Stevensville, said Bullock ignored warnings by Republican legislative leaders of budget problems as early as 2016, and that the cuts imposed on health programs were the governor’s idea.
“We want to look at putting these benefits for handicapped individuals, low-income seniors and pregnant women back in place,” Thomas said. “I don’t think that’s the way to make government leaner.”
Thomas also said that he was open to changing the revenue-estimating process, whether it was through a mid-budget cycle adjustment or greater collaboration with the governor’s office. “It’s really hard to gauge everything when predicting so far in the future,” he said.
The state’s deal with CoreCivic will extend the prison company’s contract to run Crossroads Correctional Center at the same pay rate until 2021, when a new governor is in office. The sides had been at an impasse after more than a year of negotiations.
“CoreCivic is proud to be able to assist the State of Montana during its current budget challenges,” company spokeswoman Amanda Gilchrist said in a prepared statement. “We have reached a verbal agreement that is consistent with our prior offers.”
The deal gives the state $34 million that otherwise would have been used for Montana to buy the prison. More than half of that money will go toward easing budget cuts, and the governor will be able use about $15 million for firefighting costs.
“The budget is back on track, and we’re in a much better position to take on the challenges of what this fire season can be,” Bullock said.
Thomas said the prison deal should have been made earlier so that the health care cuts could be restored more quickly. “It’s a good day today, but this should have been done six months ago,” he said.