Montana Officials Say State Budget Holding Up

By Beacon Staff

HELENA – Montana officials said Tuesday that tax collections for the past budget year are down just a little from what was expected, and haven’t dropped enough to have much impact on overall state finances.

Montana’s state government budget continues to hold up far better than many other states dealing with severe budget shortfalls during the recession.

Tax collections for the fiscal year that ended June 30 were only down about $37 million — or two percent — from what the Legislature predicted when it set the state’s two year budget, the state Legislative Fiscal Division reported. The adjustment is small in the context of nearly $2 billion in tax collections.

Only two states — Montana and North Dakota — have yet to face a budget shortfall, according to a Tuesday report from the Washington D.C.-based Center on Budget and Policy Priorities. That group said states were dealing with the “worst decline in tax receipts in decades.”

Gov. Brian Schweitzer’s budget director, David Ewer, said Montana still has a nearly $400 million projected cash balance for the current budget period.

“The governor has been very careful about managing the state’s finances,” Ewer said. “Some states are really challenged by having to go into their reserves. We are not. Our reserves are really, really strong.”

Ewer also noted that the state spent less money in the fiscal year that just ended than lawmakers predicted, minimizing the effect of the reduced tax collections.

But Ewer said the economy remains volatile and notes many states have seen severe budget shortfalls develop. He said he constantly monitors the state’s cash balance, tax receipts and key expenditure areas like corrections and welfare services.

A Legislative Fiscal Division Report noted a lot could change over the two-year budget period that ends in June 2011, and noted very gloomy trends in certain tax collections.

And tax collections are significantly less than a year ago. In 2008, $1.954 billion was collected. Given the recession, lawmakers expected it to drop by about $109 million. Instead, it went down about $146 million.

The biggest area of tax, individual income, dropped 6 percent from a year ago. But it was somewhat offset by other areas, such as corporate tax, that were up a little bit.

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