Analysts: Montana May Recoup Virus Revenue Losses in Two Years

Legislative Fiscal Division projected revenue that goes to the state's general fund will drop by nearly 13%

By Associated Press

HELENA – Any coronavirus-related revenue losses to Montana’s treasury over the next year will likely be recovered the year after, state financial analysts said Tuesday.

The state Legislative Fiscal Division projected revenue that goes to the state’s general fund will drop by nearly 13% in the fiscal year that begins July 1. The state’s revenues are then predicted to rise by 15% in the next year, according to the forecast.

Gov. Steve Bullock’s budget director, Tom Livers, told state lawmakers in an online meeting that the state is in a good economic position compared to some others.

“This is essentially a manageable situation, which is pretty remarkable in the face of a global pandemic,” Livers said.

However, he cautioned that rapidly changing conditions make it difficult to accurately predict the economic fallout of the pandemic in the state.

“As it gets further out, there are a number of variables that still have to fall into place,” Livers said.

Legislative Fiscal Division officials predicted that the state may need to use up $73 million from the budget stabilization reserve fund to cover expenditures in the 2021 fiscal year. The fund currently has $118 million. Division staff said no reductions to the governor’s budget would be necessary.

The Republicans who hold majorities in the House and Senate previously called for immediate cuts to the state’s budget, but Bullock, a Democrat, has rejected their proposals.

Senate Majority Leader Fred Thomas, R-Stevensville, again pushed for the Bullock administration to consider cutting spending despite the positive long-term outlook.

“My concern here is that there is a lot of push to keep this economy closed down like it is today,” Thomas said. “The longer that goes on, the longer our revenue is going to be lower than it would have been.”

Legislative fiscal analysts also projected that unemployment is expected to steadily decline after peaking at 11.9% in April. The unemployment rate was 9% in May.

The federal pandemic unemployment compensation of $600 per week is expected to expire at the end of July, and the division predicted a drop in personal income in the coming months.

Meanwhile, the Legislative Finance Committee voted to send a letter to the Montana congressional delegation asking to use federal coronavirus relief money to replace lost state and local government revenue.

The federal CARES Act allows states to use the relief money to help pay for expenses related to the virus outbreak, but federal guidelines prevent that money from being used to fill revenue shortfalls.

Rep. Llew Jones, R-Conrad, said that without revenue replacement, property taxes might increase to cover services like education and health care.

Senate Minority Leader Jon Sesso, D-Butte, said, “Getting authority from the feds to use what we’ve got for some revenue replacement could go a long way to deal with that structural deficit that we’ve been talking about.”

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