Legislature's revenue projections slip yet again

HELENA – The Legislature's principal financial forecaster is predicting another $30 million drop in Montana's future revenues.

Analyst Terry Johnson's report blamed continued erosion in future revenues on declining insurance-tax payments, a smaller-than-expected increase in individual income-tax collections, declines in oil and natural gas production taxes, and low crude oil prices.

State cigarette tax revenues are expected to decline by $11.3 million over the next three years due to a federal tax increase from 39 cents per pack to $1 per pack in April.

Vehicle registration fees and taxes are expected to fall over $11 million in the next three years because fewer Montanans are buying new cars and are choosing instead to re-register older models.

This report is the third prediction of falling estimates since just before the current legislaive session began. Johnson predicted a $135 million revenue decrease in December and another $85 million decrease in January. The total predicted revenue decline is now $250.9 million.

Legislative leaders said Friday they had been expecting another decline in future revenues, considering the current national economic crisis.

"I'm disappointed it's continually going down," said House Speaker Bob Bergren, D-Havre.

The Legislature’s best guess on future revenues is important because it guides lawmakers’ spending for the next two years. Lawmakers are required by the state’s constitution to submit a balanced budget.

Bergren said the House will probably adopt the latest revenue prediction this week.

Senate President Robert Story, R-Park City, said lawmakers will have to start making big decisions about the budget even though they expected falling revenue numbers.

"It's probably right where we were expecting to be," Story said.

So far, the falling projections have lawmakers considering cuts to scheduled increases in spending and not actual deficits that are forcing other states to lay off workers.

Still to be considered are the effects the new federal stimulus law will have on Montana’s budget.

Gov. Schweitzer said last week the state should receive at least $600 million in federal money, with much it earmarked for health care, transportation projects and education.

- by CNS correspondent Molly Priddy