HELENA – A new state budget analysis projects millions fewer dollars in the coffers than just a month ago — a drop large enough to let the governor start cutting spending if he chooses.
The Legislative Fiscal Division estimated Wednesday that the state will have $17 million in the bank when the current two-year budget period ends in June 2011 — a prediction that has dropped by millions of dollars with each new analysis.
Lead analyst Terry Johnson said tax collections continue to come in far below estimates and continue to decline. He estimates tax collections will be $270 million less than lawmakers thought when they set the budget with the governor.
“As discussed in previous general fund revenue reports, the revenue collection trends have progressively worsened each month,” Johnson said in his Wednesday report to lawmakers.
A day earlier, the governor’s office announced it was asking agencies to prepare contingency plans for cutting up to 5 percent from their budgets.
Budget Director David Ewer said the governor’s office — which gets the final say on whether revenue has dropped enough to warrant budget cutting — has an estimate similar to Johnson’s.
Ewer, who works for Gov. Brian Schweitzer, said its good news that the state still has money in the bank and is projected to have a positive balance through the budget period.
“As a precautionary matter, we have begun the budget reduction process,” Johnson said. “It should be noted that the situation we are in is better than 48 other states in the nation because Gov. Schweitzer insisted on very, very strong reserves when the legislative session ended.”
The governor’s office has started announcing small cuts, such as eliminating a handful of positions at the Department of Commerce, cutting scheduled repairs at a state hospital building, and cutting back on printed copies of tax booklets.
Ewer said he expects agency directors will have about three weeks to prepare contingency plans for the 5 percent across-the-board cuts. Implementation would be up to the governor.