As state lawmakers laid the groundwork for a special legislative session to tackle Montana’s $227 million budget shortfall on Monday, the proposed GOP deal for how to plug the gap was coming into focus.
At the same time, two independent sources confirmed to the Montana Free Press that Gov. Steve Bullock, a Democrat, was “in talks” with top executives of CoreCivic, the owners of a private prison in Shelby that is at the center of the 2017 special session’s most contentious proposal.
CoreCivic is offering to return $30 million in state money set aside for the eventual purchase of the 664-bed prison in exchange for a 10-year renewal on its contract to operate the facility. That contract is up in 2019.
Republicans favor the CoreCivic deal while Democrats adamantly oppose it. Some Democratic lawmakers have characterized the deal has putting a “gun to the head” of Montanans.
While the Legislature cannot legally force Bullock to negotiate a new contract with CoreCivic, GOP lawmakers have signaled their intention to leave Bullock with a $30 million hole in any solution they send to his desk. The goal, said Rep. Rob Cook, R-Conrad, is to give Bullock one option: negotiate a deal with CoreCivic or make deeper cuts to state government.
“For right now, the Republican plan is to capture the governor in a corral and give him one exit, and that exit is the prison,” Cook said. “It’s old-school politics.”
Bullock finds himself in a tough spot, having called the special session without completing a budget deal with House and Senate Republicans. On the one hand, he needs GOP votes if there’s any hope of a legislative solution to the state’s fiscal crisis. On the other, some of his most reliable GOP allies have now drawn a line in the sand on an issue that is a non-starter for most members of the governor’s own party.
Bullock’s spokeswoman, Ronja Abel, would not confirm whether Bullock or members of his administration were actively discussing the possibility of extending CoreCivic’s contract, stating repeatedly that, “the governor is working with Republicans and Democrats to find a responsible path forward.”
Democrats are accusing Republicans — who control both bodies of the Legislature by wide margins — of using the state’s fiscal crisis to back the governor and Democrats into a corner for the benefit of a wealthy corporation.
“They have the numbers, certainly, to pass their own solution,” said House Minority Leader Jenny Eck, D-Helena.
Eck said if Bullock is actively engaged in talks with CoreCivic, then it is news to her.
“We’ve made our stance pretty clear on Shelby, and it’s not just my view, it’s my caucus’ view,” Eck said. “I have yet to have anyone in my caucus tell me that they are supportive of any deal with Shelby, or that they think this is the time or the place to be doing any of this.”
Lower-than-expected revenues coupled with an extremely expensive fire season have left Bullock and House and Senate lawmakers facing the prospect of cutting government programs and services, raising taxes, or finding other sources of money to backfill the shortfall. A document prepared by one of the chief Republican budget negotiators, Rep. Llew Jones, of Conrad, outlines the “three-bucket” plan favored by Jones and other GOP lawmakers close to the negotiations.
Republican leaders have signaled they are on board with the governor’s proposal to move $76.5 million in funds from various accounts, to delay payments on certain obligations, and to implement payment “holidays” for employer contributions to the state employee benefits plans. The current list would free-up about $81.5 million to cover about a third of the total budget shortfall.
Republican lawmakers have also indicated that they’re generally supportive of the governor’s list of cuts to state agencies, though the depth of the cuts and to which agencies will be a point of debate in the coming days. That list currently frees up about $76.6 million.
The main fight will be over how to “enhance” revenues. In other words: raise taxes and fees to cover the additional $75.1 million deficit.
Most Republicans are strongly opposed to raising taxes, but some are considering a plan that would temporarily raise taxes on lodging and rental cars — which they say would be paid mostly by out-of-staters. The proposal also calls for extending the 2.75-percent premium tax paid by for-profit health insurers like BlueCross BlueSheild of Montana to nonprofit health insurance providers. That proposal would net the state an additional $12.2 million over the biennium, according to Jones’ spreadsheet.
Along with an additional $13 million from a new fire assessment and $15 million from half of the $30 million offer from CoreCivic, Jones has identified some $121.5 million in possible revenues that could be used to cover the $75.1 million needed for temporary fire revenue.
“This shows that we have a clear plan, and that we’re engaged in an honest negotiation,” Cook said. “I hope the governor is, too.”
With many Republicans vowing to oppose any increases in taxes, a final solution will need Republican and Democratic votes to survive. That means some Republicans will have to bend on tax increases, and some Democrats will have to bend on the CoreCivic contract.
According to Cook, the $30 million from CoreCivic could be be split up, with some of the funds used to reduce the size of any tax increases and the rest used to limit the extent of cuts to state agencies. The Department of Public Health and Human Services alone is facing nearly $50 million in cuts under the current proposal.
“The $30 million is logically distributed between some sort of plan that reduces the tax burden and relieves Montanans of some of the depths of these cuts,” Cook said.
Under the Republican plan, Cook said, lawmakers would appropriate the cuts to ensure the governor actually makes the cuts, and that the cuts would be equitably reduced if revenues exceed expectations.
The question now is whether Cook and Jones and Bullock — if Bullock is on board with the deal proposed by GOP negotiators — can wrangle enough members of their respective parties to get 51 votes in the House and 26 votes in the Senate on the key bills.
Cook said he isn’t sure of the outcome.
“It’s one thing to talk to folks on the phone and in online meetings, it’s another thing to take the pulse in the face of live fire,” Cook said. “I don’t have a clear knowledge of how this will play out. There’s a lot more nervousness and trepidation than I expected considering how long this ‘a third-a third-a third’ plan has been out there. But when you look straight into the gun barrel of potential tax increases, people flinch.”