State budget projections $138 million more than 2011 Legislature predicted

Revenue projections for the state’s current budget cycle continue to outpace predictions of the state legislature. Republicans and Democratic legislators are now clashing about how to view that surplus.

Officials think the state government’s bank account will be almost $427 million in the black by the middle of 2013. That’s pretty good, it’s almost $138 million more than the state legislature was expecting.

The legislature’s principle fiscal analyst Terry Johnson urges Montanans not to think of this entire $427 million figure as all surplus. Yes, it would be $427 million above zero, but it wouldn’t all be available.
“By statute, the balance can only fall to a certain point,” Johnson said.

He says the state legislature has never said the budget could fall all the way to zero. They set some benchmark above zero and if it falls below that benchmark the Governor would have to implement spending cuts to keep it there. The legislature has set the benchmark for this current budget at $150 million above zero.

Johnson says think of this projected surplus as more like $277 million.

Alright, so we’ll likely have $277 million extra dollars. What to do with it? That’s where Republican and Democratic legislators on the Revenue and Transportation Interim Committee are wrangling.

Republicans call most of that $277 million one time only funds. They point to things like tax audits bringing in record amounts or state government spending millions less than it was allotted. Republican Senator Bruce Tutvedt says when building the next budget you can’t count on that money to keep coming in.

“Structurally we’re in a positive area. But it’s just not that much money to fund ongoing new programs I think that’s the big take-home message that I see now,” Tutvedt says.

Democrats on the committee see it the opposite way. They say most of the $277 million will be ongoing funds. They look at increased individual income tax and corporate tax revenues. Oil and gas taxes are on the rise. And Democratic Representative Dick Barrett says whether the money is one time or not shouldn’t really matter.

“The question of whether or not that money is one time only at this point is not really important. When it becomes important is when we start projecting the revenue into the future. that’s when we decide whether we’re going to receive that kind of money or not,” Barrett said.

This clash of opinions and that $277 million will likely shape much of the financial debate for the 2013 Legislature.

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