HELENA (AP) – Oil and gas taxes and income taxes helped propel Montana’s fiscal year 2007 budget surplus to $544 million, about $85 million more than the Legislature expected when it set the state budget for the next two years, according to a new report.
The Legislature has budgeted much of the surplus over the next two years for increased spending, tax cuts and money set aside to fight forest fires.
The projected balance at the end of fiscal year 2009 is about $125 million, as set by the Legislature during its Sept. 5 special session.
The FY 2007 surplus was expected. State analysts have been saying for months that tax revenues were higher than earlier predicted.
In fact, in July state revenue officials said strong tax revenue would enable the state to spend another $30 million for public schools in 2007-08 and another $36 million for homeowner tax credits next year.
Higher prices for oil, wheat and other commodities played a role in the strong revenue picture as of June 30, 2007, but it’s “not totally clear what is causing the surge in (income tax) collections,” Terry Johnson, the Legislature’s principal fiscal analyst, said Tuesday.
Higher capital gains income, royalty payments from mineral production and higher corporate profits are all possible explanations, Johnson said. More detailed revenue figures later this year should help paint a clearer picture, he added.
Individual income taxes for FY 2007 were $33 million more than expected, corporate income taxes were $16.5 million higher and oil severance taxes $10 million higher, the report said.
State tax audits of corporations brought in nearly $27 million by the end of fiscal year 2007, compared to a projected $4 million. However, state income tax refunds to corporations totaled about $26 million, or $12 million more than expected.
State general fund spending for fiscal 2007 ended up $26 million less than budgeted by the Legislature. Most of that change is $22 million earmarked for public schools. That money had been replaced by oil and gas royalties earned on state lands.
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