The money IS there

February 24, 2011 / Comments (0)


Young Lily Wilhelm states her case at MEA-MFT’s Rally to Save Public Services & Education

Feb. 24 – For many months, Governor Brian Schweitzer’s office has said Montana has enough revenue to fund public services and education without cuts, without raising taxes.


MEA-MFT sides with the governor’s office. The majority party in charge of the legislature doesn’t, despite mounting evidence that shows Montana’s economy is improving and revenue is picking up.


Instead of celebrating the fact that Montana is one of only two states in the nation without a budget deficit, the majority of legislators seem to have deficit envy. So they’ve been slashing hundreds of millions of dollars to crucial programs – like public education, children’s health, state employee pay, the Montana Veterans Home, Meals on Wheels, low-income energy assistance, etc. etc. etc.  There is no need for these cuts. They are based on ideology, not rationality.


Following is a rational editorial on the issue from the Billings Gazette:

Gazette opinion: Speak up on your state budget priorities

Thursday, February 24, 2011

How much revenue will the state of Montana receive over the next 2½ years?


That question is the heart of the hottest debate at the Capitol in a generally contentious legislative session. On one side, Republican leaders say they must cut spending because there won’t be enough money to continue funding all present government services.


On the other side, Democratic Gov. Brian Schweitzer insists that Montana has growing revenues that will allow the state to cover costs of all programs in his executive budget.


Many in the Republican legislative majority want to cut the size of government. And Republican legislative leaders want to eliminate the state business equipment tax, which they can do only if that cut is offset with cuts elsewhere to keep the budget in balance.


While the political argument rages, the Legislative Fiscal Division delivered a positive financial report last week. Terry Anderson, legislative fiscal analyst, reported revised revenue estimates that the state will collect $97 million more in revenues over the next 2½ years than he projected in mid-November. That boost in projected revenue reflects mostly an increase in individual income tax collections and a forecast that collections will continue to grow.


Individual income tax is the major revenue source for Montana’s general fund. When Montanans’ income dropped in late 2008 through early 2009, tax collections dipped, too. But Montanans are earning more, and that fact is reflected in state revenues. According to the LFD analysis:


Individual income tax collections for July 1 through January were $574 million, compared with $528.6 million in the same period a year earlier.


Corporate tax collections are up $22 million.


Vehicle fees and licenses increased $12.2 million.


Most state taxes that flow into the general fund have increased this year over last year.


Since the fiscal year began July 1, the state has carried a general-fund cash balance that fluctuated between $227 million and $356 million. As of Feb. 22, the LFD reported, the state general fund had expended $23 million less than what was deposited as revenue since July 1.


Schweitzer took issue with the LFD revenue estimate, insisting that it is too low. In fact, the legislative staff estimate now is similar to the revenue estimate that the governor’s budget office made in December. However, Budget Director David Ewer now projects higher revenue over the biennium than he did in December and last week forecast that the state would have more than $200 million cash in the bank in June 2013 if the governor’s entire budget is approved.


Trying to predict state revenues for the next 2½ years is a difficult, imprecise exercise. But actual data for the first half of this fiscal year shows that the state is making a steady recovery from the recession.


With revenue increasing, it’s tougher to argue that programs have to be cut for lack of money. However, every state program should be evaluated on its merits. If lawmakers want to reduce spending on health, education and corrections to provide a tax cut, they ought to explain to their constituents why lower taxes for some is a higher priority than continued services for others.


Revenue projections from the LFD and the governor’s budget office provide useful information, but ultimately state spending decisions are political decisions. Montanans, now is the time to communicate your priorities to your lawmakers and governor.


Leave a Reply

Your email address will not be published. Required fields are marked *