HELENA, Mont. (AP) — Montana Gov. Steve Bullock's proposed $500 million spending increase in his state budget plan could be a key issue for Republican legislative leaders who started looking at the plan in earnest Wednesday.

The increase would go toward proposals including a $400-per-homeowner tax rebate, more school funding, state employee pay raises and pension fixes. The Democratic governor's plan modifies the original proposal submitted by former Gov. Brian Schweitzer in November.

Republicans plan to eye it carefully even as both sides continue to promise a new era of open dialogue.

Veteran Helena Republican Sen. Dave Lewis, a former budget director in the 1980s, said he thinks the requested 14 percent spending increase in state tax money over the two-year budget period is one of the largest he has seen.

Republican budget leaders said they will make committee votes Friday to start budget discussions at 2012 spending levels. Over two months, committees will eye inflationary increases for each program — along with the new and expanded program proposals from Bullock.

"There are things that will get a lot of analysis and a lot of comment from the Legislature," Lewis said.

The budget process generally grinds along through each chamber before negotiations begin in earnest between legislative leaders and the governor's office, often in April.

Bullock's office argues the proposal is prudent, leaves a projected surplus of $300 million and offers far more in tax breaks than it does in spending increases.

"The facts are simple: Gov. Bullock has proposed a balanced budget that returns $100 million to Montana homeowners, eliminates taxes on 11,000 small- and medium-sized businesses, invests in education and strengthens our fiscal position by shoring up our pension plans," Bullock spokesman Kevin O'Brien said.

Legislative budget analysts said the university and college state aid goes up 10 percent in Bullock's two-year budget, part of his plan to enact a tuition freeze. Funding for K-12 schools also is increased.

Bullock also proposes mothballing three Montana State Prison buildings in favor of one new one that will accommodate more prisoners without hiring more staff.

The legislative budget analysts said Bullock's plan to fix the pension system by increasing both government and employee contributions would cost $136 million. And state employee pay would go up 5 percent each of the next two years, along with a 10 percent increase for health insurance, under Bullock's budget offering.

Bullock Budget Director Dan Villa, who also held the post under Schweitzer, told the lawmakers that the new governor won't tolerate any GOP proposals to get rid of the pension in favor of a defined contribution plan preferred by some conservatives.

"Gov. Bullock believes this is the session to address the public pension shortfalls," Villa said. "We are much better off than other states in the nation, which is why we don't need to be Draconian."

But Villa told the lawmakers that Bullock has stressed that all of his staff are expected to work with legislators on their ideas.

House Appropriations chairman Duane Ankney, a moderate Republican from Colstrip, said he is optimistic a compromise will be reached. The former union carpenter, for instance, said he can empathize with state plow truck drivers and others who have been working under a pay freeze for four years.

"I am not here to pick a fight with anyone," Ankney said. "If you could take the politics out of this place and run it as a business, this would be a smooth machine."

 

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