HELENA — Montana lawmakers have confirmed the state’s estimated revenue numbers for the coming years, setting the stage for the budget negotiations in the 2023 legislative session.
“I think it only makes sense that we’re here talking about the revenue estimate this fall – at least come up with a starting point recommendation before we start talking about the details of the budget,” said Ryan Evans, assistant director for the Governor’s Office of Budget and Program Planning.
Governor's Office of Budget and Program Planning Revenue Estimates:
State analysts are largely in agreement that Montana is looking at about $7.5 billion in general fund revenue over the next two fiscal years. However, they’re still recommending leaders prepare for volatility in what they bring in.
Both the OBPP and the Legislative Fiscal Division produced independent revenue estimates, and they were very similar – differing by only about 1%. On Thursday, the Montana Legislature’s Revenue Interim Committee unanimously adopted the LFD projected numbers, the lower of the two figures.
The numbers the committee approved show expected general fund revenues of $3.80 billion for the 2023 fiscal year – the current year, ending in June 2023 – $3.71 billion for the 2024 fiscal year and $3.78 billion for the 2025 fiscal year. They also projected a preliminary ending fund balance of $1.85 billion.
Legislative Fiscal Division Revenue Estimates:
Analysts said they expect Montana’s ongoing general fund revenues to drop this year – due largely to a projected $360 million in individual income tax collections – before beginning to grow again in 2024. They believe the recent huge jump in income tax is due to shifts in capital gains and IRA income, and that it was based on a large amount of “one-time-only” money – such as federal stimulus – rather than ongoing economic activity.
During Thursday’s meeting, analysts stressed their expectations that some sources of revenue could be difficult to predict this year, and therefore subject to short-term volatility.
“Do you necessarily want to appropriate all of that revenue?” asked Amy Carlson, LFD director and legislative fiscal analyst. “You might want to think about that carefully, because I think there is still risk involved. Even though that’s our best guess, that doesn’t mean those funds are coming in.”
Sam Schaefer, a lead fiscal analyst for LFD, encouraged lawmakers to keep watching revenues as the session moves on, because updated numbers for collections could significantly change the financial picture.
“This would be a good session to just stay on top of it,” he said.
“I think we all realize how much this is probably going to fluctuate as we go through the session,” said Sen. Greg Hertz, R-Polson. “We’re probably going to make some more adjustments to it.”
Gov. Greg Gianforte’s full budget proposal, including OBPP’s revenue estimates, was released this week. LFD’s revenue estimates are available on their website.