SAN FRANCISCO — The recession has had a lighter touch in Montana than in most states, but its affects are beginning to eat into the state budget, according to a report the Legislature’s fiscal analyst delivered last week.
The Legislative Fiscal Division now predicts that general fund revenue for fiscal 2010 will be off by $122 million from budget projections, and off a further $121 million in fiscal 2011.
That is about 6.7% below revenue estimates in the biennial budget, according to the report principal fiscal analyst Terry Johnson prepared for last Thursday’s meeting of the Legislative Finance Committee, which meets periodically in the interim between the state’s every-other-year regular legislative sessions.
Of that $243 million shortfall, $213 million is attributable to lower-than-expected income tax receipts.
“Revenue collection trends have progressively worsened each month,” the report said.
As it stands now, Montana’s budget remains in balance, as lawmakers adopted a spending plan earlier this year with a $282.4 million fund balance.
If this week’s projections hold, the remaining balance would be a little more than $44 million — only slightly above the $36.4 million floor that would require Gov. Brian Schweitzer to begin making cuts.
The budget lawmakers adopted earlier this year already assumed that revenues would weaken. While general fund revenues through November are off $35.1 million from budget projections, they are down $128.1 million, or more than 23.9%, compared to the same period a year earlier.
In his report, Johnson noted that tax refunds through November, a period that includes the Oct. 15 deadline for income-tax filing extensions, where higher than had been projected.
“This is an unfavorable trend for FY 2010 since overpayments in FY 2009 means the income base is lower than originally assumed by the Legislature,” his report said.
Despite the state’s weakening budget position, its economy appears to be holding up better than most of the country: the unemployment rate for October was 6.4%, compared to 10.2% nationally, according to the Montana Department of Labor and Industry. A year earlier, though, the state’s jobless rate was only 4.8%.
Montana general obligation bonds carry double-A level ratings from all three ratings agencies.