Legislature's 'best guess' for revenues slips again

HELENA – The Legislature’s biggest job – deciding how to pay for schools, health care, prisons and other essential services – may have gotten tougher last week.

The Legislature’s chief fiscal forecaster predicted Friday that state revenues for the next three years would be $85 million less than previously expected. That’s the second drop in revenue estimates since December.

All told, the Legislature’s best guess of how much money it will have to spend over the next biennium has fallen by $220 million since just before the session began.

Terry Johnson, an analyst for the Legislative Fiscal Division, reported Friday that he expects further declines in revenues from corporate and income taxes and from oil and gas production.

Sen. Keith Bales, R-Otter and chairman of the Senate’s budget committee, said Saturday that he believes the report is an honest assessment. Shutdowns and layoffs at large companies across the state seem to make it obvious, he added.

“I’m fearful it may be down some more,” Bales said. “I don’t think we’ve seen the bottom yet in the economy.”

House Appropriations Chairman Jon Sesso, D-Butte, agreed. “We were expecting a continuous downturn of revenues," Sesso said. He said legislative leaders are expecting more information in early to mid-February.

Building a budget is always something of a guessing game – and a political one too. Last week Republicans lawmakers on various appropriations subcommittee stopped voting on spending decisions, saying they would wait until the financial picture clears.

Among the unknowns is how much Montana might receive if Congress passes President Obama’s $825 million federal stimulus bill.

Gov. Brian Schweitzer warned lawmakers that they risk falling behind schedule if they don’t go ahead a build a budget. Any necessary revisions can be made later, he and his budget advisers said.

But Bales said the appropriation subcommittees shouldn’t rush into spending decisions.

“It’s hard to approve something until you know how much money you have,” Bales said.

Sesso said it is still too early to decide which programs will get funding, but he predicted new programs with large price tags will not make the cut.

-by CNS correspondent Molly Priddy