Revenue projections indicate the state will likely have enough money at the end of the fiscal year to backfill $45 million in cuts made to state agencies during last year’s special legislative session.
“We are extremely hopeful,” says Representative Nancy Ballance, the Republican chair of the Legislative Finance Committee, which met Monday morning.
The report from the nonpartisan Legislative Fiscal Division (LFD) says there is a range of possible outcomes in the last month before the fiscal year ends; but as it stands, the state is on track to have enough revenue to put more than $40 million back into the general fund, restore $45 million worth of cuts made during the special legislative session, and put another $45 million into savings to help prevent future budgeting troubles.
Analysis from the LFD shows the state could clear the hurdle needed to start restoring the cuts by more than $130 million.
This is a significant turn around since Governor Steve Bullock called a special legislative session last November when the executive projected a $227 million revenue shortfall if nothing was done.
But now Democrat Jon Sesso, the minority leader in the Senate, agrees the outlook is improving.
“The money seems to be coming back in at levels it came in before the dip of ‘15, ‘16,’17," Sesso says. "That’s good news for Montana. And we hope to get more money back out to the providers and everybody else that relies on these general fund revenues, as best we can and as soon as we can.”
Once revenue collections are finalized, any restoration of cuts will be approved in August, according to a plan for what the state should do with excess revenues passed during the special session.
Dan Villa is the governor’s budget director. Villa says the restoration of cuts is likely to some extent, although he is skeptical of the LFD’s analysis.
“I also don’t want to get expectations too high that what could be $4 or $5 million in backfilling from one-time-only revenues is some kind of substantial windfall.”
There has been significant political debate since the start of the 2017 regular legislative session about the differing projections for what the state could expect to bring in in revenue during this budget cycle.
Villa says he will join lawmakers Tuesday to talk about adopting what’s called revenue consensus forecasting, which would require the Legislature and executive to agree on state income projections before they make a budget. That currently doesn’t need to happen.
“We have to get to consus revenue estimates as a state," Villa says. "We are one of the few remaining states that don’t require the executive and legislative branch to come to a common number, agree on it up front, and the build a budget toward that. That is absolute financial must if we are going to eliminate the volatility from our revenue estimating process.”
According to a 2011 study from The Pew Charitable Trusts and the Rockefeller Institute of Government there is quote “no evidence that consensus forecasting produces more accurate estimates than other approaches.”
However according to that same report, what it does do, is "ease the political process. Rather than arguing over competing projections of how much revenue is available, policy makers can focus on the more important work of writing the budget itself."
Lawmakers are expected to discuss consensus forecasting and other options for changing how the state projects revenue during day two of meetings, Tuesday.
