HELENA – Montana tax collections through the first four months of the budget year are $92.8 million, or 22 percent, less than a year ago, according to a new legislative report.
Terry Johnson of the Legislative Fiscal Division said taking into account potential revenue shortfalls from individual and corporate income taxes and potential higher oil and gas production taxes, the state’s general fund revenues for the fiscal year could be anywhere from $51 million to $129 million less than lawmakers forecast.
“Collections through October have not improved and are considerably worse than indicated in previous reports,” Johnson wrote in his latest report.
Johnson warned the shortfalls could eat away at the $282.4 million ending fund balance the 2009 Legislature set for mid-2011.
Gov. Brian Schweitzer said he insisted on at least a $250 million ending fund balance so the state could withstand a drop in tax collections.
He said Johnson’s latest numbers are a snapshot of the state’s economic condition that can fluctuate over time.
“That’s the reason we put the money in the bank is because we were projecting there would be declining revenues,” Schweitzer said. “Fortunately, we have a lot more money in the bank than he forecasts as declining revenues.”
Montana also has a “rainy-day account, called the coal tax trust fund, worth $788 million.
That trust fund and the budget surplus leaves the state with about $1.1 billion in reserve, Schweitzer said.
“That is the money we have on our balance sheet that gives us a positive outlook,” said Schweitzer, who was in New York City this week talking with investment rating agencies about upgrading Montana’s bond ratings.
The coal tax trust fund, though, has historically been difficult to tap. The state constitution requires a supermajority vote of lawmakers before using the trust fund’s principal.
Johnson did offer one bright spot in the budget outlook. While income tax revenue from people in companies are falling, oil and gas production tax collection could exceed earlier estimates by $14 million for the year, according to Johnson.