Fact Check: Has Montana’s Budget Grown Too Fast?

“Keep your eye on one thing and one thing only: How much government is spending, because that’s the true tax.” – Milton Friedman

Government spending is always a topic of much contention during Montana’s legislative session. And rightfully so – decisions over how much and on what to spend taxpayer dollars constitutes some of the most impactful decisions made by our biennial legislature.

But recently, public debate has centered on something even more basic: How fast has state spending actually grown?

Some claim there have only been “modest budget increases” for the last 16 years, while others, like Gov. Greg Gianforte, say that spending has grown too fast.

So, what’s the truth?

For starters, it’s important to define our measure. Some Montana leaders have pointed to the growth of population plus inflation as the fairest measure of government growth by accounting for potential changes in demand for services and in the cost of providing them.

We partnered with leading economists at the Texas Public Policy Foundation to put together an analysis of the Montana budget compared to that metric over the last 16 years:

Frontier’s analysis shows that state spending has grown much faster than population plus inflation. Spending grew 138% over the last 16 years, compared to just 54% growth of population plus inflation.

This is no “modest spending increase,” and the difference has left taxpayers on the hook for billions more than if government growth had been truly limited.

It’s true that the pace of budget growth has slowed considerably over the last 10 years compared to the preceding ten years – but it’s important to account for the larger picture.

The fact is, the budget has grown too fast, for too long.

Read more about the Frontier Institute’s recommendations to rein in spending here.

For Liberty,

Kendall Cotton

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The Latest

1. This week Montana swore in new state leadership and officially kicked off the 2021 legislature. Here’s just a few of the bills on our radar:

• HB 43 from Rep. Rhonda Knudsen seeks to expand telemedicine by permanently removing regulations waived during the pandemic, such as MT’s prohibition on telemedicine via telephone.
• LC 1036 from Sen. Cary Smith will permanently authorize Direct Care arrangements in Montana, allowing patients contract directly with their doctors for medical services.
• Rep. Caleb Hinkle has an interesting proposal in LC 1510 to review all the regulations waived during COVID to determine what should stay and what could safely be repealed.

And by my count there are at least TWELVE privacy related bill draft requests this year, including LC 1070 from Rep. Katie Sullivan and LC 3003 from Sen. Kenneth Bogner addressing third party data privacy.

2. A new Montana Department of Revenue analysis claims “rich households get big share of 2017 federal tax cuts.”

Our Take: This sort of analysis is woefully misleading and inaccurate. It does not take into account tax reductions as a percentage of income. If they did, they would clearly show all incomes benefited, and the bottom 50% of incomes received the biggest tax cuts.

3. In his first executive order released last night, Montana Governor Gianforte ordered the creation of a Red Tape Relief Task Force to implement comprehensive regulatory reform.

Our Take: Gianforte’s executive order follows The Frontier Institute’s recommendations to establish an independent council of stakeholders to oversee planning and implementation of regulatory review efforts. The order also cites research promoted by The Frontier Institute and published in the recently released Montana Recovery Agenda in regards to Montana’s regulatory climate.

Here’s our statement:

“Montana policymakers have the opportunity to unleash economic growth by providing relief from harmful regulations and red tape,” said Kendall Cotton, President and CEO. “The Frontier Institute applauds Governor Gianforte for taking the first step towards reducing Montana’s regulatory burden.”