Montana Tax Revenues Millions of Dollars in the Black for 2020
Remember in 2017 when a special session of the Legislature had to be called due to the state budget being underfunded by millions of dollars?
Fast forward to the end of 2019 and the revenue picture for the state of Montana has improved dramatically.
KGVO spoke with Nancy Balance (R) Hamilton, Chair of the House Appropriations Committee of the Montana Legislature this week, who provided the good news on the state budget.
“We had the finance committee meeting in Helena this week and things do look very good,” said Balance. “In fact, as I was driving home I thought of how they looked two years ago. We were coming off of a special session and we were looking at almost $100 million in cuts, revenue was down and we were worried about how long it was going to last. You know how you have that feeling in the pit of your stomach worried about how long it was going to last?”
Balance explained just how much better the revenue picture is just over two years later.
“It really is good right now,” she said. “Revenues are about $60 million higher than what we thought they were going to be. Our general fund is expected to end about $100 million beyond the recommended operating expenses or the reserve that we need. We’ve been able to fill the fire fund to $55 million which should cover the next two years and by the end of fiscal year 2020 which will be June 30, we’ll probably add even more to it.”
The obvious question for Ballance is where did all that money come from?
“Most of it is income tax,” she said. “Part of it was coming back from a temporary downturn, and we thought it was only going to be temporary because people were just waiting for something to happen. The Trump administration was talking about tax cuts. Then, Trump made the tax cuts that affected income tax here in Montana, so that’s where most of that comes from, bringing revenue back to the norm and then a little bit beyond.”
Balance said the legislature has created special rules governing those funds.
“We have actually put in law that if you’re over your recommended operating reserve then that money goes into a ‘rainy day fund’,” she said. “It can’t be accessed except on a loan and repay basis. That fund can grow to $100 million itself, which is where it is now. If it goes above that $100 million then we have set up something that says it goes into a reserve fund for infrastructure, and then that can grow to a certain amount.”
Balance has her own recommendations on what to do with that amount of excess funds.
“What I would recommend is that when a Governor wants to send that money back to the taxpayers, we’ll put a reserve fund in place so that it can bring down property taxes or income taxes, but it would be set up that way similar to our other reserve funds,” she said. “That way, money flows in during the flush times and you can’t access them when the money is not there and put some safeguards in place to make sure your rainy day fund stays intact.”