Governor Says Montana Can Withstand Dip in Revenue

By Beacon Staff

HELENA – Gov. Brian Schweitzer said Friday that a new report showing a larger-than-forcasted dip in revenue collections is not cause for alarm, because the state still has significant reserves.

Legislative analysts reported Friday that tax collections from July to September fell 20 percent from the same three-month period last year, and so far appear to be significantly lower than expected by lawmakers who predicted revenue would slide some during the recession. But the report warned it’s still early to draw conclusions.

Schweitzer said the state still has projected reserves of $300 million, which will provide a lot of cushion. He said the abnormally large reserves were set up to help prepare for what the recession would bring.

“We knew there would be storm clouds on the horizon,” he said in an interview. “We are still in pretty good shape.”

Many states have had to deal with dramatic budget problems by slashing services and increasing taxes. Montana has so far been spared from any such deficits.

The revenue update from legislative fiscal analyst Terry Johnson looks at the first three months of the state’s fiscal year. It marks the start of the two-year budget period established by lawmakers earlier this year.

Johnson said tax collections through September fell by $76 million, or 20 percent, compared with the same period a year ago. He notes that lawmakers assumed revenue would decline over the entire budget year by just 2 percent.

“As detailed in the report, however, collection data for three months of the fiscal year is somewhat inadequate to draw a finite conclusion on the future collection patterns for fiscal year 2010,” Johnson wrote in his report.

Schweitzer said he can’t predict how long it will take tax collections, primarily dependent on economic activity and personal incomes, to rebound.

“I can’t tell you how much longer the recession will last and how much the dollars will be,” Schweitzer said. “We’ll take this month by month. Remember, this is just a snapshot.”

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