Significant changes to federal funding, prompted by the reconciliation bill and other actions by the administration of President Donald Trump, are expected to have major repercussions for Montana, according to reports from state agencies.
During an extensive eight-hour session in Helena, legislators were briefed by state legislative support divisions and agency personnel on Wednesday. Key areas such as food assistance and government-funded healthcare are facing changes, which may also result in decreased tax revenue for the state due to new regulations in these sectors.
The Legislative Fiscal Division’s report, “Federal Budget Impacts to State,” highlights specific alterations to federal grants. A previous report projected an almost $160 million decrease in the state’s budget.
According to the report, approximately 44.5% of the House Bill 2 budget is sourced from federal government funds. The bill encompasses certain “triggers” that would necessitate collaboration between the finance committee, interim committees, and interim budget committees.
Amy Carlson of Legislative Fiscal commented to legislators, “We’ve well established that those triggers have happened in (the federal reconciliation bill),” emphasizing the need for ongoing discussions on the effects of federal funding changes on Montana’s budget and potential responses.
Marcia Howard, Executive Director of Federal Funds Information for States, provided an overview of federal changes, stating the administration’s priorities as aiming “to cut taxes, to cut mandatory programs, to cut discretionary grants, to shrink the federal footprint generally, to make the federal government smaller and to vastly expand executive branch power.” She noted the administration’s extensive use of available tools to achieve these goals.
Howard pointed out that such changes have been less “transparent” than usual, with grant programs being restructured and timelines shortened if reopened. Some actions to halt grant programs might be legally questionable, she mentioned.
“It may be that by the time all of this runs its course, the clock has just run out, that it becomes irrelevant whether it was legal or illegal, because it was two or three or four years ago, and the funds just never made their way to the recipients,” Howard said.
Susie Hedalen, the state’s superintendent of public instruction, noted that federal funds constitute only 13.7% of a school district’s budget, suggesting limited concern over potential federal education cuts. The Trump administration has indicated intentions to shut down the federal Department of Education.
Concerns were also raised about possible funding reductions for the Montana State Library, the Montana Arts Council, and the Montana Historical Society, as federal funding forms a significant portion of their budgets.
Discussions among legislators and presenters included strategies to fund food assistance programs amidst the federal shutdown, with House Bill 924 proposing the use of specific funds or state loans as potential solutions.
Rose Bender from the Montana Budget and Policy Center commented during a public session, “The Legislative Fiscal Division memo today shows an estimated biennial revenue loss from the individual income tax provisions of around 230 million each biennium.” She expressed concerns about further revenue losses and the state’s increasing responsibilities in covering SNAP and Medicaid programs amidst these tax cuts.
New regulations on Supplemental Nutritional Assistance Programs demand more state contributions and link funding to an “error rate,” which for Montana is between 7% and 8%, reflecting both over-allocation and under-allocation of funds.
Josh Platt from Legislative Fiscal explained, “There are less federal dollars coming in for SNAP administration, more state funds required as we move forward in SNAP, there is that state responsibility tied to the error rate in SNAP, right,” emphasizing ongoing efforts to reduce this error rate at the agency level.
Additional topics included the impact on coal and oil leases, which will see reduced company payments and, consequently, lower tax revenue, as well as transportation funding.
Two significant state transportation projects, Nine Pipes along Highway 93 and another in East Missoula, have been affected by the funding cuts. Chris Dorrington, head of the Department of Transportation, indicated that the Nine Pipes project might be scaled back, while the East Missoula project is unlikely to proceed.
Walker Hopkins from Legislative Fiscal highlighted cuts within the justice system, noting, “What we’ve been able to identify so far is areas that would be hit in terms of federal funding is our assistance and services for victims of domestic violence, dating violence and sexual assault.”
