I’m worried about Montana’s financial situation. I’m deathly afraid of Missoula’s.
Yep, we’re talking about money...or lack thereof.
The state might be able to handle this. Following the 2019 legislative session, the state had a $210 million surplus. I don’t know how much of that is left.
Here in Missoula, things are not so rosy.
I haven’t taken an in-depth look at the city’s finances since last year, when I was running for City Council. At that time the city had a few million budget surplus, though they also had over $300 million in debt.
Missoula County is going to see a lot less tax revenue this year and next year as well. We know that state tax revenues fell 9% during the Great Recession, which added up to $120 billion.
In addition to this, the state is going to lose lots of money via unemployment claims as well as the increased number of people that now qualify for Medicaid due to their now reduced incomes. The state helps finance both of those programs.
Our next legislative session begins in January, and by law we need a balanced budget.
With decreasing tax revenues at the state level - and likely a decrease in federal funding as well - Montana will be forced to cut spending or increase taxes and/or fees.
Ohio is already making budget cuts of 20%. Arkansas is going to lose $353 million in tax revenue, or 6% of their budget. In Nevada, 38% of the state’s budget comes from tourism revenue, and that industry is now dead. Rhode Island was already $200 million in debt before this crisis, and now that they’ve shuttered their two casinos the state is losing $1 million a day in tax revenue.
Montana is going to be in the same boat.
Chances are very good that Gianforte will be in the Governor’s Office by January, so spending cuts will happen in this state, too. I suspect DPHHS will get the brunt of this.
The cuts will probably happen before Gianforte gets in. As we saw, other states are doing this already. For instance, in Virginia they know that the virus will cost the state $2 billion, and there’s already talk about rescinding the 2% raise that teachers just received.
New York is going to get hit badly.
The state has spent $1 billion already on the virus. They’re getting $4 billion in aid from the feds, but they’ll see a revenue drop of $15 billion, or 8%.
Let’s not forget that taxes are no longer due on April 15, but July 15. That’s an extra three months that states won’t have money that they expected to have.
New York is going to suffer. $12 billion that would have come after April 15 tax filings won’t be coming to New York for another three months...and I doubt the total will be that high.
California is in better shape than New York. The state has a $20 billion budget surplus. One big problem is that much of their tax revenue comes from capital gains, and there’s not going to be a lot of capital gains to tax this year. State income will fall precipitously.
Missoula is in especially bad shape due to the bond market. Investors have fled the stock market for the ‘safety’ of the bond market. This means that it’ll cost more for Missoula to issue bonds.
The state’s fiscal-year-end comes at the end of June. There’s still time to curtail spending, and that’s what we’ll see numerous municipalities do.
Over the next few months, Missoula will have a terrible dilemma: cut spending or layoff workers. I think the city will have to do both. There is no rainy day fund in this town; just hundreds of millions in debt.
State and local governments account for 13% of all employed people in this country, so those cuts will hurt.
Of course, the city workers that will lose their jobs in the coming weeks will just be in the same boat as the rest of us...though they’ll still have vacation and sick leave to draw on. Most private sector workers in Missoula don’t get that.
I suspect this will change the political landscape in Missoula. The state is heading for a long-term recession. The state has money; Missoula does not.
The next mayoral election is in November 2021, and candidates will begin to announce after the November election.
I’m not sure Engen will run again. He’s had a long run, and the prospect of going through another recession probably doesn’t appeal to him. Still, he does need to work for a few more years to get lifetime retirement and healthcare.
Whichever political party is in charge will get the blame. In Missoula, that’s Democrats.
These people have already made it painfully clear that they have no financial know-how. We know this because they’ve raised taxes every year for more than a decade.
That strategy is now dead.
Even hardcore liberals will be anti-tax at this point, considering they have no jobs and no money.
The mayor, the city council and the county commissioners have no idea what to do right now.
They know change is coming, and fast...and it’s not the kind they want.