Bullock includes Medicaid expansion in budget

HELENA — Gov.-elect Steve Bullock unveiled budget changes Friday that include increased education funding and keeping intact a proposed expansion of Medicaid under the federal health care law.

Bullock released the changes to outgoing Gov. Brian Schweitzer's two-year budget proposal as lawmakers arrived in Helena in advance of next week's start to the Legislature. Bullock's proposal, which largely mirrors fellow Democrat Schweitzer's offering, faces a tough road through Republican-run legislative chambers.

Bullock's offering increases spending a little on education, compared to Schweitzer's proposal put out in November, and slightly modifies the plan to fix public pensions to get the support of local governments.

Bullock is also including his campaign promises to give a $400 tax rebate to homeowners and to eliminate the business equipment tax for businesses with less than $100,000 of equipment.

That would raise the threshold from the current level of $20,000, and puts him at odds with Republicans who would prefer to reduce the rate for all sizes of business.

Bullock is embracing the proposal to accept the federal money for the expansion of Medicaid that is part of federal health care reform — a potential sticking point with Republican legislative leaders. The proposal only costs the state about $5 million this biennium to extend Medicaid coverage to 80,000 more Montanans.

Incoming Senate President Jeff Essmann of Billings said he has, in general, been strongly opposed to the idea of accepting more federal money because he argues it could evaporate in the future and leave the state paying the bills.

"I think my number one priority is to have a conservative budget that does not increase its reliance on a funding source, the federal government, that is very much in doubt," Essmann said a day earlier.

Essmann said he remained "optimistic" about finding common ground with Bullock.

But both sides have said they want to make an effort to reach consensus on sticky issues. Bullock said he thinks his proposal, which leaves a projected surplus of $300 million compared to the $400 million planned by Schweitzer, is appropriately conservative.

The Medicaid expansion is included in a Bullock health care program that includes adding more state support for training doctors, and would increase payments to doctors and hospitals as a way of appeasing a group that has long argued the government isn't reimbursing enough to stay involved with state programs.

Bullock also massaged a plan to borrow money to build more college buildings, and idea similar to one that failed two years ago despite some bipartisan support and the backing of contractors.

A sticking point in Schweitzer's proposed pensions fix, which asks both employees and their government employers to pay more into the beleaguered system, was that local governments didn't want to pay more. Bullock said he convinced them to support the idea after offering more natural resource revenue to help foot the bill.

The education funding increase still includes plan for a college tuition freeze, a plan that not only faces the Legislature but also the Board of Regents.