Rob Natelson: A Federal Lawsuit Threatens Constitutional Limits on the State Legislature

Most state constitutions limit the financial powers of the state legislature. They have to: In the 19th century several states nearly went bankrupt from bad fiscal practices.

Now a federal lawsuit puts those protections in danger.

The Montana constitution requires the state to run a balanced budget. And it requires that before the state can go into debt, the proposed debt must be approved either by 2/3 of each house of the legislature or by a vote of the people.

In 2011, a group of government employees and apologists sued the State of Colorado in federal court, arguing that the Colorado constitution’s limit on the legislature’s taxing, borrowing, and spending powers violates the U.S. Constitution. The plaintiffs argue that unless a state legislature has absolute power to tax, borrow, and spend as it wishes, that state does not comply with the U.S. Constitution’s requirement that it have a “republican form of government.”

The suit is ridiculous on a number of levels, as my co-author and I show in Independence Institute issue papers here and here. Nevertheless, last year an Obama-appointed federal judge refused to dismiss it, and ruled that it could proceed.

That judgment is now on appeal. On April 19 I’ll be in Helena on behalf of MPI to discuss the suit and how it threatens both the Montana Constitution and the fiscal health of Montana and the livelihood of her citizens. Keep tuned for more details.

Montana’s New Transparency Site

The state has finally put a checkbook and employee salaries online. Good for them. And I mean that. It’s a great first step and Governor Bullock and his new administration deserve great credit for doing it.

So now let’s make it much more useful with just a little more effort.

How do we do that?

First, expand the dates of data available on the online checkbook. While a snapshot is nice for looking at who sold the state, for example, copy paper last December, what’s really nice  to know is how much the state – or a department – spends on copy paper over time and who supplies it. That would allow departments and agencies to make comparisons prior to going shopping themselves, vendors to tailor their bids based on going rates, and citizens to compare how they spend their money to how the state spends it. All of those actions will save dollars by creating a more competitive and transparent process and give taxpayers assurances that that process is both fair and effective.

Next, expand the dates and include total compensation for state employees. There are two issues here. First, expanding the dates is important so that taxpayers can see compensation trends rather than snapshots in time. Why is this important? The recent pay freeze provides a perfect example. By looking at trend data on MPI’s own transparency portal, it’s clear that virtually every state employee was being paid more at the end of the ‘freeze’ period than before it, and that the largest increases occurred at the higher pay bands. You can only get that kind of information from trends, which requires multiple years of pay data available.

But even more importantly, as far as I can tell the state’s pay data only has hourly rates and does not include things like overtime, bonuses, and any number of other forms of compensation that state employees receive. That’ just dishonest. The state wants to know everything that you make – what’s on your W-2 – when you calculate your taxes. You should see everything they make when you pay those taxes. Now of course I’m not talking about travel pay and other straight reimbursements of direct costs associated with doing their jobs; but if it’s considered compensation by the Department of Revenue, it should be available to taxpayers.

So…it’s a good start but let’s not be satisfied with it just yet. The state could add immeasurable benefit to their site by expanding the dates back at least five years and including all employee compensation, not just basic pay rates. They created this site out of available funds, which is very commendable considering former Governor Schweitzer killed previous efforts by saying it would cost millions. So let’s invest a little more to increase the efficiency of our state government and our taxpayers’ confidence in it.

Oh, by the way. Did I mention the Montana University System isn’t even included in the discussion much less the data. Let’s see if they’re willing to step up before being prodded into it.


Montanans Eager to Track State Spending


For Information Contact: Carl Graham at 406-600-1139


Statewide Poll Reveals Desire for Transparency

Bozeman, MT – 4/06/09 – In a poll released today, over 93% of Montanans said that it is important for state and local governments to supply spending information that is fully transparent and easily accessible to taxpayers. In addition, over 65% said they would use a searchable web site containing detailed government revenue and spending information if it was free and easily available on the internet.

The poll, conducted by the Montana Policy Institute in Bozeman – a nonpartisan policy research center, sought to gauge public attitudes towards current state and local government transparency, and to determine how much Montanans know about current open records laws. It found broad support for detailed and easily accessible information surrounding the individual recipients and amounts of state expenditures. Over 95% would like easy access to contract information, 67% would like state employee compensation information to be easily available, and 81% believed that all state spending information should be easily available and accessible to taxpayers.

In contrast to the high numbers of Montanans who would like more data, only 16% of those polled indicated they had ever tried to obtain detailed state revenue or spending information, and of those barely a third (37%) were satisfied with the speed and ease with which their request was handled. “These results clearly fly in the face of the recent Governor’s Office testimony (opposing SB 241, the Taxpayer Right to Know Act) that the current system of showing up at a state office or mailing a request is good enough.” according to Carl Graham, president of MPI. “People want to know where their tax dollars go, and they want finding out to be as easy as getting their own banking information or finding an old high school friend.”

The poll’s results seemingly go beyond assumptions about public attitudes behind several measures currently working their way through the state legislature that would provide more detailed and easily accessible information about state revenues and spending, including federal stimulus dollars. These measures, if approved, would provide easier access to program level revenues and expenditures, but would not satisfy the apparent desire of many Montanans for more detailed information about specific recipients and amounts. SB 241 and HB 645, the Montana Reinvestment Act, both direct the state to make some information available to the public, but, according to Graham, “While these are both steps in the right direction, what the public really hungers for is the ability to track exactly whose wallet their dollars end up in and why. They want to know that their trust is not being violated as all this money is doled out. And they want to see the information before it’s too late to act on it.”

The poll was conducted the week of March 30th, 2009 and contacted 10,000 Montana households. It has a margin of error of +/- 3%.


The Montana Policy is an independent nonpartisan policy research center based in Bozeman. It provides analysis and information to encourage individual freedom, personal responsiblity, and free markets in Montana.

Montana Policy Institute

67 W Kagy Blvd, Ste. B

Bozeman, MT 59715



MPI is a Montana tax exempt corporation operated exclusively for the public benefit. No substantial part of the activities of the Institute are used for the carrying on of propaganda or otherwise attempting to influence legislation, promote any political campaign, or on behalf of or in opposition to any candidate for public office