Montana’s budget future is brighter than legislative analysts are forecasting, Gov. Brian Schweitzer told county commissioners gathered in Billings on Monday.
“I’m not saying it isn’t going to be tight,” Schweitzer said of the upcoming state budget cycle, “If you got ideas for more spending, maybe in your county, now is not a good time.”
However, the governor said, things are looking up.
After a 22 month slide in state tax collections related to a slumping economy, revenue collections have been increasing for four straight months. Market prices for wheat and cattle are up, which should improve spending on Montana’s Main Streets and eventually bolster the coffers as well — without an increase in state taxes, he said.
The outlook is one the Democratic governor has been making repeatedly as the general election nears and Republicans argue that GOP victories are needed in state legislative battles in order to curb government spending.
The state’s nonpartisan Legislative Fiscal Division, is also forecasting that cuts will be necessary to reconcile current government spending with a projected $309 million drop in state tax collections directly tied to the state’s slumping economy over a two year period.
Legislative fiscal officers base their projections on the performance of past state budgets.
The forecast was given to both Republican and Democratic legislators two weeks ago.
But Schweitzer is arguing that the Legislative Fiscal Division’s historically conservative income projections have been way low in the past and will be again.
In real dollars, the legislative revenue forecast was $243 million lower than the actual amount collected in the 2005 budget year and underestimated by $400 million for 2007. For the budget year just ended, the estimate was about $200 million too low.
Schweitzer said he is counting on real tax collections to again grossly exceed legislative estimates, and he’s also ready to tap $341 million in cash reserves to balance the budget, if needed.
The governor said Republicans were critical of his plans to sock away so much money two years ago when he first proposed the nest egg, which is now looking like the right call.
On the election trail, the GOP is telling voters that the state has created a government that it cannot afford, Schweitzer said, but he doesn’t think the numbers support that claim.
“I’m not going to apologize to anybody for putting that money aside,” Schweitzer said. “The next time one of these jokers shows, up you can say, well no, I know the real numbers.”
However one key Republican legislator, Sen. Jeff Essmann, of Billings, said the debate over whether the government will have enough cash on hand to pay for existing services misses the point, which is whether government growth should continue.
Should Republicans take control of the state Senate in 2011, Essmann is a probable majority leader of that branch.
“I think the American people are looking at the big picture, and the big picture is that government has grown,” Essmann said.
“It’s grown tremendously under President Obama. It’s grown tremendously under Governor Schweitzer.”
Schweitzer is quick to point out that most of the government growth during his tenure can be traced to a few big-ticket items, starting with public school spending, which increased $233 million after the state was sued for not meeting its constitutional requirements to adequately fund the education of every Montana child.
The state also ratcheted up its corrections spending by $60 million, mostly to treat inmates with mental illnesses or substance abuse problems. The spending increase kept the prison population from growing by sending people through treatment instead.
Ultimately, slowing the growth of the prison population saves money, Schweitzer said.
In addition, the state boosted its funding of universities and colleges by $53 million, which prevented tuition increases for two years. It also absorbed public defender costs once shouldered by counties, a move that increased the state budget by $20 million, but cut county justice spending.
Essmann said there are other parts of the state budget that increase automatically, which need to be looked at for savings. Republicans are also advocating for a review of all government programs to see which aren’t working and need to be eliminated.