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Montana Budget Picture Stops Downward Spiral

By Beacon Staff

HELENA – Analysts predicted Monday in a new report that the state is still facing a deficit by the middle of 2011, but for the first time in months that deficit is not growing.

Monthly updates from the Legislative Fiscal Division have painted an increasingly dim view as the effects of the recession hit state coffers, and income tax collections shrink far below the estimates used last year when the two-year budget was set.

An anticipated surplus near $300 million has shrunk to a projected shortfall of about $60 million over that time.

But analysts said Monday that projection is holding steady since last month, but cautioned little new data was available for the latest report.

Terry Johnson, chief analyst for the Legislative Fiscal Division, said a lot of ground needs to be made up to meet original projections. Total general fund revenue collections this budget cycle are 21.5 percent less than the same time last year.

“This means that total future collections must improve by a net $196.7 million in subsequent months to be on track,” he wrote in his report.

Gov. Brian Schweitzer is currently considering a series of budget cuts and transfers that the report said would erase that projected deficit.

Schweitzer has not indicated when he will make a decision on those proposed cuts, which could be around five percent, or $40 million.

A bipartisan legislative panel has asked Schweitzer to cut less from the state budget if Congress sends more money to the state.

A major piece of the tentative budget cut plans cancels promised rate increases for providers of services to the needy.