HELENA — Montana state government’s budget outlook is “relatively positive,” legislative fiscal analyst Amy Carlson told a committee Thursday.
She and the division staff updated committee members on state government and budget trends. When legislators convene in January, one of their major duties will be to approve a state budget for the next two years.
State tax revenues are expected to grow by 9.1 percent, or by $377 million, for the two-year budget period ending in mid-2017.
However, Carlson said Montana also will face a series of potential general fund budget pressures.
These budget pressures could total from $67 million to $90 million, Carlson estimated. The nine largest potential budget pressures listed include increases in human services provider rates and pay hikes for state employees.
Carlson called the presentations Thursday “a high level outlook,” and said more specific details would come in a follow-up study this fall.
Analyst Stephanie Morrison projected that state revenues will grow by 4.7 percent in fiscal 2016 over the level in 2015 and by 5.6 percent in 2017 over 2016. In contrast, revenues dropped by 1.3 percent in fiscal 2014 and increased by 2.8 percent in 2015.
However, Morrison warned that general fund revenue “has been historically volatile from year to year,” particularly with corporate income tax and the oil and natural gas production tax.
Small percentage swings in the state’s largest single revenue source — individual income taxes — also can significantly alter general fund revenue collections, she said.
Interest rates are likely to rise at some point, she said.
As interest rates rise, the state would realize some additional revenue in interest on its treasury account. Individuals may realize some higher returns on their investments, thus increasing state revenue from income taxes. Earlier in the day, analysts reported that the projected ending fund balance for the 2014 fiscal year ending June 30 is expected to be $383.4 million. That’s down $2 million from the Legislative Fiscal Division forecast in March because of some adjustments upward and downward.
The projected balance as of mid-2015 is $349.1 million. Actual balances were $452.3 million in fiscal 2012 and $537.6 million in fiscal 2013.