Following a reelection victory, Republican Gov. Greg Gianforte has proposed a two-year budget plan for Montana emphasizing tax cuts, public safety, and education investments. This $17.9 billion proposal sets the stage for budget negotiations in the 2025 Legislature. Gianforte aims to cut state income tax for top-bracket earners and offer property tax relief to homeowners, as suggested by his tax task force. Additionally, he plans to allocate $150 million for state prison expansion, $250 million for public safety, and $100 million to increase K-12 teacher salaries.
During a Nov. 13 press conference, Gianforte presented the budget as a guide for enhancing economic freedom and community well-being. “Our budget prioritizes the health and well-being of our communities and, most importantly, the next generation of Montanans,” Gianforte stated. He described tax cuts as crucial for fairness, emphasizing, “We should do more to help Montanans keep more of what they work so hard to earn.”
The budget also proposes $300 million to support the state pension system. Approximately $6.6 billion will be sourced from the General Fund, primarily funded by income taxes. The plan intends to leave a $555 million reserve in the General Fund by June 2027.
Amid rising costs of living in Montana, the budget includes numerous tax cuts, such as a “homestead exemption” to reduce property taxes on primary residences while increasing them for second homes and vacation rentals. Key tax proposals involve:
- The homestead property tax proposal aims to lower homeowner taxes by 15%, aiding about 215,000 homeowners and 130,000 renters. Median residential property taxes rose by 21% last year.
- Reduction in the state’s top-bracket income tax rate from 5.9% to 4.9%, affecting income over $20,500, and expanding earned income tax credit for low- and moderate-income families.
- Business equipment tax changes by increasing the exemption threshold from $1 million to $3 million, exempting around 700 businesses from the tax.
On the spending side, Gianforte proposes significant investments in public safety, education, and state pension protection. Spending highlights include:
- $150 million for Montana State Prison expansion to address overcrowding.
- $250 million for a public safety commission akin to the $300 million behavioral health commission initiated in 2023.
- $100 million to boost teacher pay, focusing on early career educators.
- Funding for additional district court judges and staff in Yellowstone and Missoula counties.
- Continued funding for the state’s expanded Medicaid program, set to sunset in 2025 without legislative renewal.
- Implementation of the state employee pay plan with negotiated base pay raises.
- $23 million annually for a recruitment and retention fund for state employees, addressing pay adjustment needs.
- $300 million boost to the state pension system to safeguard against economic downturns.
Gianforte said, “We cannot achieve long-term prosperity without safe communities.” However, the plan excludes new childcare capacity proposals, despite Montana’s childcare deserts. The budget will undergo scrutiny and modifications as it advances through legislative committees. Senate President Matt Regier expressed optimism, calling it “a great starting point” for conservative ideas. Minority Leader Katie Sullivan criticized the income tax cuts as benefiting the wealthiest, promising collaboration on property tax reductions, school funding, and Medicaid renewal. Gianforte anticipates working with lawmakers in the session starting Jan. 6.
—
Read More Montana News
