State Revenue Surpasses Lawmakers' Projections
A new state revenue update says Montana’s rainy day and firefighting funds are looking flush as more money is coming in than projected. But a report from legislative researchers indicates the recent cashflow spike could be a temporary blip.
Montana’s general fund revenue came in 4.4 percent, or $107 million above lawmakers’ consensus projection from the 2019 legislative session.
That’s according to the end of budget-year report that’ll be delivered to the Legislative Finance Committee next week.
Republican Rep. Llew Jones is the committee secretary.
"At least from the savings account perspective, money on hand to face crises, the state is in a good position," Jones says.
It’s a shift from recent budgeting years when dipping revenues resulted in a special legislative session to balance the budget, and resulted in significant cuts in social services.
A boost from individual income tax collections is driving most of Montana’s revenue growth this year. But the Legislative Fiscal Division report says the uptick of more than 5 percent above estimates is likely a continuation of ripple effects from taxpayer behavior following federal tax changes in 2018.
A slight dip in individual income tax collection is projected for the next fiscal year as the behavior adjustments level out.
The United States is currently in it’s longest-running economic expansion in the nation’s history.
Representative Jones says no one knows if or when a recession could occur, but reports he’s watching show there is an increased chance of an economic slowdown.
"And a lot of the factors out there are indications that we may, we aren’t going to avoid a recession forever. We certainly have the savings account in the bank to help, potentially, deal with it. But our challenge is that the state relies on an income tax. And if there is a recession, income tax is incredibly variable."
"You know, we have been preparing. In as much as, if I look at both, let’s hope, knock on wood, that a recession does not occur. At some point it could well. But we now have built up a strong ending fund balance and rainy day fund, both in the statutory reserve we have about $100 million, and in total we have $356 million, to weather the challenges of an up and down economy."
In addition to the general fund reserve, the state ended the fiscal year with $36 million in its fire suppression account, in-part due to mild fire seasons the last two years.
Legislative researchers and the governor’s budget office are expected to give state lawmakers a full budget outlook next Tuesday.