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Montana special legislative session begins

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HELENA, Mont. -

The state finds itself $227 million in the hole, and state law mandates a balanced budget.

So now, the question is where to cut, where to tax, where to transfer funds from one agency to another. One proposal is to increase the tax on rental cars from the current four percent to 10 percent and double the lodging tax from three to six percent. These proposals seem to have some bipartisan support.

Another proposal is to accept an offer from the owners of the private prison in Shelby of $30 million in exchange for a new contract. Opponents have said they see that as a form of blackmail.

Gov. Steve Bullock is proposing to address the total budget deficit in thirds: $76 million in cuts to state agencies, $75 million dollars in tax increases, and $76 million in transfers among state agencies.

Republican state senator Roger Webb from Billings says the legislature wants to avoid direct tax increases – if humanly possible – but he admits there will be some pain in cuts to state agencies.

How does the state find itself in debt? Revenue projections from two years ago could not have predicted major and simultaneous declines in grain and beef prices. The energy industry has also been on the decline, including revenues generated from activity in the Bakken oil field. Finally, this summer's wildfires really drained state coffers. 

As for the state's surplus, the so-called rainy day fund – long-touted to be around $300 million – it too was based on projections, and there never has been actual cash in that fund.

The legislature is scheduled to be in session through Wednesday, but many state lawmakers are indicating it will likely last longer. 

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