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Rainy-day fund has Montana in good position to deal with COVID-19 impacts

Gov. Steve Bullock has led Montana with a steady hand and disciplined fiscal management for the past seven and a half years. This continues to ring true as he helps navigate our state through this unprecedented crisis. It is clear to me that he is managing our response to the pandemic and our state budget in the way he always has: on the basis of data, informed projections and facts. Not politics.

As the vice chair of the Committee on Taxation in the state Senate, I have worked with the governor and my colleagues on both sides of the aisle to keep Montana in a good financial standing, and it is paying off for our state right now. No state has been spared from economic challenges in the face of this situation, but as Gov. Bullock said at his press conference this week, Montana differs from many of our peers in a key way: Our state finances were in a historically strong position heading in the pandemic.

Here’s why: In the 2017 legislative session, Montana established the Budget Stabilization Reserve — a rainy day fund — for the first time in our state’s history. Coming into this fiscal year, our state had a surplus in our general fund balance. We were able to transfer some of that surplus to put the rainy day fund at its legal maximum capacity of $117 million. Now when faced with loss of revenue resulting from the COVID-19 pandemic, we can use approximately $92 million in the rainy day fund to offset those losses.

This leaves Montana better-prepared and in a stronger financial position than most other states in the country. While our neighboring states are contemplating cutting K-12 funding or slashing 5 percent to 15 percent of their budget proposals, the rainy day fund gives us time to gauge the economic impacts of COVID-19 on our state and preserve key essential services that Montanans rely on for the time being.

As the governor announced last week, due to the actions we had proactively taken, our state does not need to make unnecessary, across-the-board cuts to our essential services that Montanans rely on, especially during this difficult time. Making those cuts would only expand unemployment and make a bad situation worse.

It is certainly raining right now, but this is exactly why we established a rainy day fund. No one could have predicted the economic disruption brought on by the outbreak of COVID-19 a year ago, but under Gov. Bullock’s leadership of a bipartisan effort, we prepared for the unexpected and, unlike many other state governments, have not been forced to consider sweeping cuts to our services.

Though this is good news for our state, there is no doubt that many of our workers and businesses are still hurting. Throughout this crisis, we prioritized protecting the health and safety of all Montanans, knowing that a healthy economy is dependent on having a healthy workforce and healthy communities. That is still true now more than ever. As Montana begins to gradually re-open, we must continue to put health first, so that we are able to stay open and maintain our remarkable success at turning back the pandemic.

We still have a long way to go in navigating this crisis and all that comes with it, but I know that Gov. Bullock and his administration will continue to work every day to see that Montana’s economy is able to recover swiftly and that Montana’s workers, families, and small business owners stay safe and healthy and can bounce back and thrive once again.

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Democratic Sen. Sen. Dick Barrett of Missoula is vice chair of the Montana Senate Committee on Taxation.

 

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