HELENA – Lawmakers on Friday disagreed with the governor’s office on how much tax money Montana will get over the next two years — a key figure that must be determined to ensure a balanced state budget.
Gov. Brian Schweitzer argued that the lawmakers, who will meet in January to start drafting a budget based upon his proposal, are relying too heavily on forecasts that have never been right.
“Not that it matters that much,” Schweitzer said. “Every week while the Legislature is in session, someone will run in with new piece of paper and shout ‘new estimates are in!'”
The Montana Constitution requires a balanced budget. But to do that, lawmakers have to essentially guess how much tax money will be coming in over the next two-year budget period.
A legislative panel decided Friday to undercut the governor’s prediction by $45 million. That means they have to cut at least that much from the governor’s recently released spending plan or agree to live with less in predicted reserves when the budget period comes to a close in 2013.
It’s not the only brewing disagreement between Schweitzer and Republicans that will be controlling the Legislature next year. GOP leaders said the governor’s budget proposal relies too heavily on “one-time” transfers of money that won’t be available down the road.
Money under Schweitzer’s plan is transferred out of the Treasure State Endowment Program funded with coal-tax revenues that go to local governments projects, natural resource damage funds, school facility reserves and other pockets of money.
Key Republicans not keen on that idea said that would have to cut more than $100 million from the proposed spending plan to compensate.
Schweitzer said the GOP will have to explain why it is cutting money in education and other areas when it is not necessary. He said his plan nearly eliminated the business equipment tax, gives homeowners a $150 tax rebate and increases education funding.
“If they come to town and say we don’t like that, we are going to throw that in the garbage and start cutting things, well: Why? Why are we cutting?” Schweitzer said.
The governor’s office argued at a hearing Friday of the Revenue and Transportation Interim Committee that the forecasting models used to predict tax revenue have consistently underestimated the figure during economic recoveries.
Budget Director David Ewer said the models underestimate a problem heading into a recession and underestimate the recovery to tax revenue coming out of a recession.
“We have an absolute pattern of being wrong when the economy is rebounding,” Ewer told the panel. “Every day, that passes by there is less risk of a double dip. I don’t see it happening.”
Sen. Jeff Essmann, a Billings Republican who will serve as majority leader, said it is better to guess low than to guess high.
“If you guess wrong you are not going to have a balanced budget,” Essmann said.