These are challenging times for our state and I appreciate very much the opportunity to share a few thoughts with you about where we go from here. We have much work to do together to fix up our state for the future.
The referendum result on June 8 was more than the defeat of a sales tax. The voters also turned away from significant property tax reductions, significant income tax reductions, and equalization of public school funding. Additionally, they set in motion an automatic income tax increase, which, although it does balance the budget for the biennium, is not the Tax Reform I hoped for or believe in.
While no one can predict the future, it seems likely at this writing that a petition drive to suspend the new income tax increase will gather the necessary 27,000 signatures before the September deadline. If that occurs, the income tax increase would be halted pending another referendum in November 1994.
In the meantime, of course, the state budget would be some $72 million in deficit and we would need to call a special session of the Legislature, as required by the Constitution, to balance the budget. It seems safe to say that in such a session, given the June referendum results, the major emphasis would be on cutting spending.
Here's the fiscal reality of our state's General Fund: fully 65 percent goes for education--kindergarten through 12th grade and the university system; 19 percent goes for Human Services; and nine percent for Corrections.
That's where the cuts must come from. And any new ones come atop more than $100 million already cut during the recent regular legislative session. We are getting down to the bone in many places. Our office, for instance, is operating with barely 40 percent of the staff it had in 1977. We're not complaining. The point is everyone must make sacrifices in this economic environment.
We'll get the job done for sure. And we're looking forward to working with the new Commissioner of Higher Education, Dr. Jeffrey Baker, in establishing priorities and plans. The point, we believe, is that voters must become convinced that they are receiving maximum value for every tax dollar collected and spent.
For a variety of reasons, some dating back to the sixties' failed wars on poverty and in Vietnam and, later, the disillusionment over such scandals as Watergate and the public fiscal fakery that occurred in many states including Montana in recent years, many Americans distrust all levels of government. Personally, I find this very sad. And, if I have one paramount goal for my time as steward of this office, it must be to begin restoring trust in Montana government. That is, as they say at the Ford Motor Company, Job One.
It has taken nearly three decades for that distrust to build. And it will not evaporate over night. But we also face a long-term fiscal crisis in Montana.
A few statistics tell the story: about 137,000 Montanans left our state from 1985-90 for lack of opportunity. We lost 13,100 jobs in the last year; that's one job every 40 minutes, every day, every night, throughout the year. Average weekly wages have shrunk. Only six states have a smaller median income than Montana.
We must stop this hemorrhaging. We must pull ourselves away from overreliance on our historic resource extraction mentality. We harvest a billion board feet of timber in Montana each year; 90 percent of it goes somewhere else for processing, with all those jobs. The same for our grains, our ores, even, in a way, our scenery, which nearly seven million tourists come and enjoy, photograph and take home, leaving little behind in terms of financial resources to help run our state.
Many of our students, as you know, grow up here. We pay to educate them in public schools. We subsidize their education in the universities and colleges. And then they feel the need to move elsewhere because the jobs available here are inadequate in opportunity, pay, and challenges.
Eventually, we will need major tax reform. It's that simple. We cannot keep existing jobs, let alone attract new ones, with our business property tax rates set nine times larger than our neighbors'. Companies think at least nine times before investing in that climate. Our children will be unable to find meaningful employment for the future. And we must also stop relying so heavily on homeowners' property taxes, penalizing them for their investments and improvements.
We believe there is no better initial investment a community can make than in its education systems. Those systems must also participate in the same kind of critical self-examination as overall government, trying to increase efficiencies, to maximize utilization of all facilities and personnel, and to increase the confidence of taxpayers that they receive maximum value for every dollar spent. It can seem, for instance, bothersome to some that our university system has as many administrators earning more than $50,000 as the rest of state government, which is three times larger.
We will work through these challenges of reinventing government. I believe a leaner, more efficient government operation at all levels will benefit society in the long run. Although it is at times difficult to preside over re-evaluations of programs that have taken on a life of their own over the years, it is essential and beneficial that, after a decade or so of inattention, our citizens take a larger ownership role in their government and institutions.
I look forward to working with all of you in this process, which, I trust, will take our special state into the 21st century. My office--and its mailbox--remain open to all of you for your suggestions and ideas. Montana's problems are nonpartisan; so, too, must be the solutions.
These changes begin not with the big picture I have outlined here, but with each of us, you and I, individually examining in our own hearts how and why we do everything we do. Our example will be the lasting lessons we bequeath to our children and students, not the tired lectures of yesteryear.
[Editors' Note: Professor Rob Natelson was personally invited to author a statement on his views on the future of the University System and related matters for this issue. He expressed his regrets but declined the invitation.]