Present Law Budget: What does it mean and how does it affect our communities?

With the 2021 Montana legislative session less than a month away, decisions made by our state level policymakers will determine how Montanans weather this pandemic. The state budget is a big piece of that puzzle by providing funding for schools, health services, and maintenance of our roads and bridges.

Key budget terms that will be used a lot this session include present law budget, present law adjustments, and statewide present law costs. These are important actions the legislature will take to ensure the state can continue to provide critical services for our communities. Since it has been a while, we should brush up on these terms, so we can track and understand the decisions that will affect our friends, families, and communities.

Present law is the level of funding the state needs to maintain services, at the level and under the laws approved by the legislature in the last session. Present law, by itself, does not include any changes that may be a result of increased school enrollment, services caseloads, or inflation. Those are included in present law adjustments.

Present law adjustments are agency-specific budget adjustments (either up or down) needed to maintain services at the level approved by the legislature since the last budget. This could include changes in the number of people served by the Department of Corrections, the number of seniors or individuals with disabilities accessing nursing home or community services, or inflationary adjustments to provide the same level of services for the next two years. An example of a present law adjustment in the most recent budget is an increase in federal funds for the Department of Public Health & Human to continue to provide existing services for their food and energy assistance programs, given the rise in food insecurity and demand for energy assistance during the coronavirus pandemic. The budget also provides an inflationary and enrollment adjustments to support Montana’s public schools.

Statewide present law costs are costs that are adjusted for all agencies using the same methodology. Increases in the cost of personnel benefits or increases in insurance costs are examples of statewide present law costs. Present law adjustments are different from statewide present law because they are agency specific, and are not applied to all agencies, due to varying agency responsibilities.

While these adjustments to the budget may be construed as “growth,” they are really adjustments to ensure the state can continue to provide critical services at the current level. These are services allowing seniors and people with disabilities to stay in their home and live with dignity, ensuring our children are getting the education they need to succeed, and maintaining health care coverage for nearly one in four Montanans through Medicaid and CHIP.  As we head into another legislative session, we hope policymakers will keep in mind how important these adjustments are to their communities and constituents.

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