HELENA — Gov. Greg Gianforte is going into his final two years in office, and on Thursday, he said his last state budget proposal is aimed at completing the goals he set when he became governor in 2021.
“The budget I'm presenting this morning is about one thing: realizing the ‘Montana Comeback,’ and knowing that at the end of my term, we will have left Montana in better shape than when we found it,” Gianforte said.
Gianforte presented highlights of his budget Thursday at the State Capitol, though the full proposal is not set to be available until Monday.
(Watch the video to hear more from Gianforte on his budget proposal.)
Unsurprisingly, one of the biggest items is lowering the state’s top income tax bracket to create a “flat tax” – a change Gianforte has been publicly advocating for this year.
Currently, in 2027, residents will pay 4.7% on their income up to a specific level – $65,000 for individuals and married people filing separately, $130,000 for couples filing jointly and $97,500 for heads of households. The rate will be 5.4% on any income above that.
Gianforte has proposed setting the tax rate to 4.7% on all income. He argues Montana needs to lower its rate to make the state more competitive in attracting business. The state has already made several income tax cuts during Gianforte’s administration, and he says revenues have still remained strong.
“We don't have to choose between a strong balance sheet and letting Montanans keep more of what they worked so hard for – we can do both,” he said.
Gianforte also called for increasing the state earned income tax credit from 20% to 30% of the federal credit, as a way to help lower-income Montanans who aren’t paying the top rate and therefore wouldn’t benefit from the flat tax.
The governor’s budget plans also include hundreds of millions of dollars in one-time-only spending, on a wide variety of programs. They include:
- $125 million for the state highway trust and $100 million for county-maintained roads and bridges.
- $30 million to shore up the state employee health plan, and $14 million for employee bonuses.
- $25 million for state investments into the behavioral health system.
- $13 million for a state trust to help fund school facility improvements.
- $10 million to support local 911 systems.
- $300 million to bring the state’s budget stabilization fund – the “rainy-day fund” held as reserve in case of future revenue crashes – to around $900 million.
“Since Day 1, we've made it a priority not to grow state government in a permanent way,” Gianforte said. “When we have surpluses and it falls into the one-time-only category, we use it for one-time-only expenses.”
Once the governor proposes a budget, the next question is what the Legislature will do with it.
Senate President Sen. Matt Regier, R-Kalispell, told reporters this week he supports “tax relief across the board,” but he has questions about how it will be structured.
“It's a matter of where the tax relief is going to go,” he said. “I do think the Senate's appetite is a property tax sustainable structure fix – and what does that cost, how does that fit into a flat tax, I think those are all the details that need to be played out here.”
Meanwhile, leaders from the Democratic minority in the Legislature said they’ll fight against a flat tax proposal.
“That is not what Montana voters want; that is not what any voter I talked to would choose to do with $100 million a year,” said incoming House Minority Leader Rep. SJ Howell, D-Missoula. “That is a clearly held unified value across the Democratic caucus. I think that we can't afford a flat tax – it is not fair, despite the messaging.”
