Lawmakers look to revise how state approves revenue estimates

State fiscal analysts are again revising current revenue predictions upward. Officials now say Montana’s bank account will have nearly $170 million more than the Legislature was expecting. That’s $30 million more than the state’s last report released in February.

Partly because of this disparity, some lawmakers are looking to change how these estimates are approved by the legislature.

State lawmakers use a revenue estimate every Legislative session as a baseline. In other words, they say,’this is our best guess of how much money we’re going to have over the next two years.We’re going to use this figure to dictate how much we spend—on programs, infrastructure—whatever.’

The spending and the revenue estimates should be pretty close. But what we’re seeing this time is that the money coming in is much higher than they estimated. Higher by about $170 million.

How does that end up happening?

Well, the revenue estimate comes to the legislature from a committee of lawmakers that meets between sessions, the Revenue and Transportation Interim Committee. They talk with legislative analysts, analysts from the Governors office and other economists before they bring that best guess to the legislature as a Resolution.

“So they have that basis to make a decision, and when they make a decision they know there’s the potential that those numbers can be revised later,” Johnson said.

He says lawmakers seem pretty happy with that process until Revenue Estimate Resolution makes the legislature.

“The resolution doesn’t have to pass both the Senate and the House to make a change to the revenue estimates is what current statute says,” he said.

The bill does not have to go through the whole legislative process State Senator Jim Peterson (R-Buffalo) says that’s unique.

“It’s the only resolution in the entire legislature that can sit in the committee for 90 days and not be acted upon and yet,” he said. “By statute it becomes the baseline for passing (the budget.)”

This process was really relevant last session. Republicans and Democrats argued over the estimate. More information was coming in during the session, showing higher revenues than predicted. Democrats wanted to raise the estimate, so the legislature could increase spending. Republicans wanted to keep the estimate where it was, to keep spending lower. Since the Republicans were in power—they could sit on it and the estimate would automatically pass as the baseline.

Fiscal Analyst Terry Johnson says that happened in the House in 2011.

“Last session, the resolution never went to the Senate. So the Senate is arguing ‘We never even had the chance to review it or make changes,'” Johnson said.

Senator Jim Peterson suggests creating a subcommittee from both the House and the Senate to hold detailed hearings on the estimate during the session “to give it transparancy, to gather information, to educate legislators and to give the numbers some credibility.” He says at least that way both chambers would have input on the estimate before it automatically moves on.

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