Montana Revenue Estimate Up, Budget Negotiations Pending

By Beacon Staff

HELENA – Lawmakers heading into tense negotiations over spending plans for the main state budget and federal stimulus money have a little more money to play with and say they believe a compromise can be reached.

For the first time in six months, the prediction that pegs tax collections over the next two years didn’t go down. The figure is used by lawmakers to balance the budget.

Republicans and Democrats charged with sorting out different spending plans that came out of the House and the Senate said they hope to be done in a week. Both sides, entrenched so far in very different positions, said they have started talking informally and believe a compromise is coming.

“We’re all talking. That communication is huge,” said House Speaker Bob Bergren, D-Havre.

Two years ago, the Legislature imploded and failed in its sole constitutional duty to approve a state budget. The governor called them back in for a special session.

Sen. Keith Bales, the Otter Republican expected to lead budget negotiations for the Senate, said he does not see that happening again.

“I don’t think there will be a stalemate,” Bales said. “I think we can go ahead on working together and craft a budget that is good for the state.”

Democrats are upset that Republicans in control of the Senate pared back funding for the expansion of the Children’s Health Insurance Plan approved last fall by voters. They also oppose an across-the-board cut of 2 percent to state government from the budget version that cleared the House — which is split 50-50 between the parties — and other GOP plans.

Republicans say the CHIP reduction, along with others in state government, are aimed at making sure the state doesn’t spend too much in a recession.

Bales called the latest revenue estimate, the first this session to go up amid a torrent of poor economic reports, “very good news.”

The Legislative Fiscal Division reported a modest increase of about $17 million over its last prediction of about $3 billion in two-year state revenue. The change is small, but very noteworthy because it did not go down as has been the trend since the recession hit.

Terry Johnson, principal fiscal analyst, said there could be a stabilization in the effect the downturn is having on the state. But he noted that he is worried about a steep drop in wage withholding taxes, which went down 4.3 percent in the first quarter compared to a year ago.

He said lawmakers should not count on that small increase since a small change in wage and salary income has a big effect on state revenue.

Bales said the revenue estimate does not change his view of the budget.

“I hope we can reach a place that we are all comfortable with,” Bales said. “I don’t this it’s a matter of getting everything you want, it is a matter of finding positions that people are comfortable with.”

Also on Wednesday, the Senate gave final approval to its plan for spending federal stimulus money and a measure that makes needed changes in law for that chamber’s plan for the main budget.

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