Week 13: Marijuana bills advance largely unchanged, state budget clears Senate

Montana Senate Passes State Budget Bill, Rejects Attempt to End Medicaid Expansion

The state budget is on the move again in the Montana Legislature after the Senate passed in on a 33-17 vote Thursday, making few changes and defeating an attempt to end Medicaid expansion in the process.

House Bill 2 is the only bill the Legislature is constitutionally required to pass, as it determines how much money state agencies and programs will receive for the next two years. This session, the budget is about $12.6 billion, with funds going to five main categories: government operations, health and human services, natural resources and transportation, the judicial branch and law enforcement, and public education.

The bill came before the full Senate after passing out of the Senate Finance and Claims Committee on a bipartisan, 13-6 vote. On the floor, lawmakers didn't make many changes, though several attempts by Democrats to add back programs cut by Republicans in the House failed to gain traction.

Lawmakers proposed the most amendments to the section of the bill that sets the budget for the Department of Public Health and Human Services, which accounts for nearly 50 percent of all state spending at $6 billion per year. One amendment sponsored by Sen. Shane Morigeau, D-Missoula, sought to add $1 million in funding for suicide prevention programs within the Addictive and Mental Disorders Division. Morigeau also sponsored the amendment in the Senate Finance and Claims Committee, where it was also defeated.

"We're all impacted by suicide in Montana because it's an epidemnic," Morigeau, who lost his sister to suicide, told Senators. "Knowing that means that we have to do better."

But Sen. Bob Keenan, R-Bigfork, who serves as a member of the committee that worked on the health budget, urged lawmakers to vote against the amendment. Keenan said he agreed that Montana is experiencing a suicide crisis, but said he couldn't support appropriating $1 million with "no goals and no program," with no indication of where the money will go.

"We need to quantify the effectiveness of this," Keenan said. The amendment died on a 22-28 vote.

Democrats in the Senate also made another attempt at restoring continuous eligibility for Medicaid expansion, a system that allows people who are approved for Medicaid to stay on for 12 months before needing to re-apply. Lawmakers in the House removed continuous eligibility earlier in the session. The attempt to restore the program in the Senate failed 19-31.

Democrats also attempted to restore other budget programs like the "STARS to Quality" program in the Office of Public Instruction, which offers optional program effectiveness assessments and advice to preschool programs. Sen. Edie McClafferty, D-Butte, also tried again to add $600,000 per year in funding to eliminate copays for parents of public school students who qualify for reduced school lunch. Both amendments failed.

One notable amendment proposed during the discussion came from Sen. Brad Molnar, R-Laurel, who suggested removing all state funding for Medicaid expansion, which would effectively kill the program. First passed in 2015 and extended by the Legislature in 2019, Medicaid expansion offers health insurance to more than 90,000 low-income Montanans. Molnar argued many people on Medicaid expansion are not working, and that taxpaying Montanans shouldn't be paying to cover their insurance. However, a 2020 report from several state agencies indicated that seven out of ten Montanans eligible for Medicaid expansion are currently employed. Molnar said cutting Medicaid expansion would encourage people to get a job.

"To some, that may seem a bit heartless -- to me, it's helping the working poor of Montana," Molnar said.

Sen. Jason Small, R-Busby, urged his fellow Senators to vote against the amendment, though he added that he "could certainly appreciate a good bill hijacking" to laughter from Molnar.

"Now is not a good time for people to be losing healthcare," Small said.

The amendment failed 20-30.

After the more than four-hour hearing concluded, the Senate lifted their rules temporarily to allow the budget to go through its final two Senate votes in the same day, with Senate President Mark Blasdel, R-Kalispell, saying he anticipated it would end up in a "conference committee" -- a group of lawmakers from both chambers who come together to work out the differences they have on a bill.

Sen. Ryan Osmundson, R-Buffalo, chairs the Senate Finance and Claims Committee and serves as the point-person for the budget in the Senate. He commended lawmakers in both parties for doing a "fabulous" job on the budget, which is 3.6 percent larger than the previous state budget -- notably lower than the four percent rate of inflation.

"This is a good budget. It represents a budget that did 'hold the line' [on state spending]," Osmundson said. "As a whole, Montanans are extremely resilient, and this budget funds the services they expect and the services they want."

The budget will now head back to the House for consideration of the changes made in the Senate.

Montana House Advances Rec Marijuana Implementation Bills; Promises More Work in Senate

After a fracas in committee that nearly left Republican leadership's favored approach on the cutting room floor, the Montana House of Representatives has advanced three competing recreational marijuana regulation bills with promises from lawmakers that the bills will be further developed in the Senate.

House Bills 670, 701 and 707 all moved on to the Senate ahead of a key deadline April 8, the date by which all bills affecting state finances have to advance from their house of origin, or are considered dead. Each bill proposes vastly different approaches to regulating and taxing Montana's new recreational marijuana market, which voters approved by an initiative in the 2020 election.

Representatives on both sides of the aisle have raised complaints that the three bills were rushed through the House without enough time for thorough vetting, a concern that Republican leadership acknowledged during a party meeting prior to the House debate on the bills.

"This has come at us so fast in such a short amount of time, we need to keep these [bills] moving so we can continue to have input," House Majority Leader Sue Vinton, R-Billings, told members of her party during the meeting. "I want to be clear: your leadership wants all of these bills to progress."

Vinton's emphasis on all three bills moving forward came after the House Taxation Committee initially voted HB 701 down after some Republicans on the committee joined Democrats expressing concerns over the bill in its original form. Following an arrangement with the House Business and Labor committee to revive HB 707, all three bills moved on to the full House.

The three-hour floor session began with debate on House Bill 701, the bill favored by Republican leadership and Gov. Greg Gianforte. Lawmakers came prepared with a list of more than 30 amendments for the bill after a time crunch forced by the April 8 deadline forced the House Taxation Committee to delay any amendments to the full House.

Rep. Mike Hopkins, R-Missoula, is sponsoring the 144-page bill, and called it a "controlled, safe and responsible" implementation of adult-use marijuana that he said built off the lessons the state learned in regulating medical marijuana. Hopkins' approach would see recreational marijuana sales taxed at 20 percent and would keep medical marijuana's tax at four percent. The bulk of the funds raised would go into the state's general fund -- 88 percent -- while 12 percent would go toward some conservation efforts like state parks and trails and recreation accounts. Roughly $6 million annually would pay for the governor's proposed "HEART" fund, a program for substance abuse and addiction recovery.

Lawmakers made several amendments to HB 701 on the House floor, with many focused on where revenue from recreational marijuana taxes should be directed, though most amendments from Democrats died on party-line votes. House Minority Leader Kim Abbott, D-Helena, sponsored an amendment that would have restored the original programs Initiative 190 proposed funding for, like conservation, health care, veterans' services and more. Democrats have frequently argued the Legislature should "respect the will of the voters" and fund those programs, despite the Republican counterargument that appropriating funds in a ballot initiative is unconstitutional.

"Just because we have the power to ignore the will of the voters doesn't mean we should use it," Abbott told House lawmakers. "I really think that 57% of voters -- a bigger number than the governor got, a bigger number than many of us got -- were clear that they wanted recreational marijuana money to go in a certain direction."

Hopkins urged lawmakers to vote against the amendment, citing constitutionality issues and arguing that Montanans voted for I-190 not because of where the revenue would go but simply to legalize marijuana. The amendment died on a party-line 33-67 vote.

Another amendment from Rep. Derek Harvey, D-Butte, would have changed the model by which counties can choose to participate in recreational marijana sales. Under HB 701 as it currently reads, all Montana counties would have to hold a vote to approve recreational marijuana sales, despite voters already doing so statewide. Harvey's amendment would have changed the "opt-in" method to "opt-out," allowing counties to vote to prohibit recreational marijuana sales. Harvey said the change would allow the state to get marijuana tax revenue sooner, rather than waiting for counties to vote to allow recreational sales, but the House killed the proposal on another party-line vote.

Several minor amendments from Republicans made it into the bill, including one to give some funding to police departments to replace K-9 drug dog programs in anticipation of increased need and another to require warning labels on marijuana products warning of possible side-effects.

HB 701 cleared the House on a 65-33 vote.

The House also passed HB 670, sponsored by Rep. Derek Skees, R-Kalispell. That bill, called the "conservative approach" by supporters in committee, would keep I-190's "opt-out" model for marijuana sales in counties, and would divert a third of tax revenues into a trust fund to be used to cover expenses Skees says will result from legalization of recreational marijuana -- though Skees has remained vague as to what expenses the state should expect. The other two-thirds would go into public pension accounts.

Skees' bill drew the most support in committee among the three approaches, especially from existing medical providers who said it would offer them the easiest path into the recreational market and keep them protected from big marijuana sellers looking to enter the state.

"I think that when we grow this whole new program, I want to make sure we don't grow government," Skees said.

Democrats raised the same concerns with HB 670 as with HB 701, citing its lack of conservation funding, but the bill passed all the same on a 66-33 vote.

Rep. Brad Tschida, R-Missoula, is sponsoring HB 707, the final recreational marijuana proposal to clear the House. Tschida's bill offers a radical departure from its competitors, proposing a 20 percent tax on marijuana strictly at the wholesale level, a regulatory scheme he says will bring marijuana policy in line with existing alcohol taxation and sales. Additionally, Montanans looking to grow their own marijuana for personal use would have to apply for a "purple card," something not required by the other two bills. All tax revenue would be deposited into the state's general fund.

Tschida previously stated he hoped elements of HB 707 would be consolidated into whichever marijuana bill emerged as the Legislature's favorite, but for now, the House passed it on a 66-33 vote.

Each of the three bills will now head to the Senate, where Republican leadership has said to expect a great deal of work to be done ironing them into a single bill.

Bill would Prohibit Searches of Consumer DNA Databases Without a Warrant

A bill that would require investigators to obtain a warrant to search consumer DNA databases like 23andMe or Ancestry.com drew criticism from law enforcement representatives who say it would make it harder to solve cold cases during a hearing in the Senate Judiciary Committee Friday, April 9.

House Bill 602, sponsored by Rep. Mallerie Stromswold, R-Billings, passed the House of Representatives on a 97-2 vote in March and is now being considered in the Senate.

The bill drew support from civil rights and liberty-focused groups that said it would bolster Montanans' privacy protections in the digital age. Patrick Webb spoke in support of the bill on behalf of Libertarian political group Americans for Prosperity.

"Montanans have spoken emphatically time and time again that we cherish the right to privacy," Webb said. "And that is something we have ingrained in our own Montana constitution."

The bill cleared the House just before a key deadline that saw hundreds of bills scheduled for votes over a period of two days. Some proponents of the bill said that deadline led to confusion about the bill's purpose, resulting in an amendment that "gutted" the intent of the bill, according to Webb.

The amendment put on the bill in the House of Representatives states law enforcement must receive a warrant to search a consumer DNA database unless the consumer "waived" their right to privacy with the company who operates the database. Since most consumers do so to some degree by agreeing to a company's terms of service, Webb argued the bill would no longer protect consumer's private information against government encroachment.

"Restraints on government need to be a separate discussion than what individual contractual agreements are," Webb said.

Opponents representing law enforcement advocacy groups said the amendment was a welcome addition, but still opposed the bill for the restrictions it would place on investigations.

Mark Murphy, representing the Montana Association of Chiefs of Police, said the bill would make solving cold cases through DNA evidence harder, as judges would be unlikely to find probable cause to search a DNA database.

"All of the bills that I've testified against are restrictions on government," Murphy said. "Government is not the enemy here, folks."

Murphy said DNA database companies and big tech companies already require customers to waive some privacy rights when they use their services, while he said government entities in Montana have always been careful to respect privacy boundaries. Murphy said the only time he believes the state of Montana conducted a search of a DNA database resulted in the solving of the cold case murder of a Missoula child from 1974.

"These databases are in the privacy invasion business. When you sign up, you have to agree to terms of service. That's a waiver of privacy," Murphy said.

Stromswold told the committee that she didn't mind if the bill moved forward with the House amendment, but said she would appreciate it if the committee voted to remove it.

The next stop for the bill will be a debate in the full Senate if it's passed out of committee.

Montana House Approves Bill Expanding Tax Credits for Film Productions

After tinkering on it for more than a month in committee, lawmakers in the Montana House of Representatives advanced a bill with bipartisan support that would expand tax credits for entertainment productions.

House Bill 340 is sponsored by Speaker of the House Wylie Galt, R-Martinsdale, who also sponsored the 2019 bill that started the program. HB 340 expands the state's capacity for issuing tax credits to film productions, raising the cap on annual credits from $10 million to $250 million.

Galt told lawmakers on the House floor that the bill would take advantage of one of the fastest-growing industries in the country and help Montana capture dollars from productions that are spent directly in communities.

"This is putting Montanans to work," Galt said. "This is a jobs bill."

Galt touted the success of the Paramount TV production of "Yellowstone," which filmed its fourth season in the Flathead last year. That production alone absorbed 85% of Montana's $10 million in film tax credits, leading Galt to seek an expansion to the program.

However, HB 340 as originally drafted would have removed the cap on credits entirely, leading to some consternation from Democratic lawmakers who said the impact to state revenues could be intense. After a month of negotiations, the House Taxation Committee added an amendment from Rep. Dave Fern, D-Whitefish, to the bill, putting on a cap of $250 million in tax credits -- still significantly higher than the original $10 million cap, but not unlimited as originally proposed.

On the House floor, Fern said he supported the bill and urged his fellow lawmakers to do the same, praising the work done by the Taxation Committee on the measure.

Several lawmakers said they'd heard from constituents who were looking to start state-of-the art film production studios in Montana to take advantage of the uptick in business driven by the tax credit program. Rep. David Bedey, R-Hamilton, said the impact of the filming of "Yellowstone" had a "truly awesome" impact on his home district in Ravalli County.

Rep. Jim Keane, D-Butte, expressed his support of the bill. During his opening remarks, Galt said he suspected Keane would be excited about the bill for its job-creating potential.

"Boy, is the Speaker right. This is the jobs bill I've been waiting for," Keane said. He added that the tax credits are placed behind a strict system of reporting requirements and are only issued after a production has had a demonstrable financial impact on the community it filmed in.

A note explaining the bill's potential financial impacts says the increase from $10 million to $250 million in tax credits may result in an annual loss of nearly $50 million in potential state revenue by 2025, though Bedey said the note only takes into account "liability," not "assets," as he and other supporters of the bill have said film productions have wide-ranging positive economic impacts on the areas they film in.

The House passed the bill on a bipartisan 79-15 vote, and it now heads to the Senate for additional debate.