Montana grapples with tighter budgets and demands for better employee pay

Montana State Roundup

Published December 1, 1990  | December 1990 issue

Talk of cutting state budgets invariably makes public employees a little nervous. Expenses can be reduced only so far until programs are eliminated, people start losing jobs and pay raises are foregone.

In Montana, where the systemized annual wage increase for state employees has been frozen for five of the past six years, the next biennium was expected to bring relief. Gov. Stan Stephens' Committee on State Employee Compensation recommended an $81 million increase for the next two years, or about 7.1 percent annually. But what the governor's budget ultimately offered was $50 million—4.5 percent—as well as a reduction of 400 jobs.

"It's a disaster when you take a good look at it," says Jim Adams, associate director of the Montana Public Employees Association (MPEA), which represents 5,800 of the state's 14,000 public employees.

Essentially, the MPEA sees the governor's proposal as intolerable—effectively reducing state staff, increasing the workload and then offering a raise with the savings from the layoffs. "It's kind of an eat-your-young approach to state services," Adams says. The MPEA had supported a $92 million plan that would have introduced a system to reward longevity and set annual increases at about 10 percent.

Montana's Budget Director Ron Sundsted, on the other hand, calls the MPEA's position unaffordable. He says he understands the employees' concerns, but at a time when the state will have problems meeting the growing needs of its schools, prisons and Medicaid programs, there is no hope for larger pay increases.

The administration and labor were trying to negotiate a settlement at the time this fedgazette went to press. Ideally, the two sides hoped to come to a unified agreement to bring before the Legislature. The more likely scenario is that no settlement will occur, Adams says, and the Legislature will be presented with two distinct proposals—and, most likely, some sort of "job action." A job action is not a strike, Adams says, but, in this case, will probably take the form of a days-long sit-in while the Legislature is in session this winter.

At the heart of the governor's proposal is a plan to bring state wages in line with the market. To do that, each job classification has been compared to similar jobs in the state of Washington and Montana's four bordering states: Idaho, Wyoming, and North and South Dakota. Montana's job classifications rank about 18 to 35 percent below the average wage of the neighboring states; those differences are even greater when Washington is included.

The governor's plan calls for every employee to receive a 3 percent raise; in addition, for every 1 percent that an employee's wage falls below the market rate, an additional 0.15 percent will be added to the 3 percent. Under the plan, raises will range from 3 to 6 percent, or an expected average of 4.5 percent.

While the idea of bringing state wages in line with the market is appealing, Adams admits quite frankly that the MPEA does not trust that management will fairly implement the plan.

Regardless of how Montana resolves its labor dispute, an even greater issue may resurface in the 1991 Legislature: how the state will continue to finance the increasing needs of state programs at a time of economic uncertainty. As it did in 1989, the proposal for a statewide sales tax may likely resurface. Montana has no state sales tax and relies on income and property taxes for its general fund; consequently, even though the state is one of the lowest per capita-taxed states, it has one of the highest levels of state income tax.

David Fettig