HELENA — The state general fund’s preliminary ending fund balance for the fiscal year that ended June 30 was $457.1 million, or $268.2 million more than the 2011 Legislature had projected, the Legislature’s chief revenue forecaster said Thursday.
Lawmakers in 2011 had anticipated a general fund ending balance of $188.9 million in mid-2012.
Looking ahead, Terry Johnson, a principal legislative fiscal analyst, said that the projected ending fund balance, or surplus, as of June 30, 2013, is now at $412.5 million. That’s $262 million more than the Legislature forecast.
Johnson told the Legislature’s Revenue and Transportation Interim Committee the state’s general fund revenue collections had been volatile in recent years.
State general fund tax collections dropped by 7.5 percent in fiscal 2009 during the national recession and plummeted by 10 percent in fiscal 2010, before rebounding to an 9.6 percent increase in fiscal 2011. He said they settled in a more normal growth rate of 5 percent for fiscal 2012, which ended June 30.
In fiscal 2012, state general fund revenue collections from all sources totaled $1.88 billion. The individual income tax was the largest source, bringing in nearly $899 million. Next were property taxes at more than $236 million and corporate taxes at nearly $128 million.
Looking at revenue sources, Johnson found three areas where the actual collections topped legislative estimates by $113 million in the 2012 fiscal year that ended June 30:
--Individual income taxes. The actual returns were $89.5 million more than had been estimated.
--Corporation tax. Actual returns were $12.8 million more than projected.
--Remaining sources: These were $10.7 million more than expected.
Revenue estimate are a critical part of setting the state budget. The Montana Constitution contains a balanced budget provision that says the total money appropriated by the Legislature to state agencies cannot exceed estimated revenues.
Democratic Gov. Brian Schweitzer and leaders of Democratic House and Senate minorities have contended the past two legislative sessions that the Republican-controlled chambers were underestimating revenue to hold down state spending. That resulted in some budget cuts in human services and forced higher tuition in the university system and higher local property taxes for K-12 schools, Democrats said.
Republican leaders have countered the past two sessions that the national and state’s economy were so uncertain they feared a second recession and wanted to constrain spending.
Some of that tension played out at the meeting Thursday ahead of the 2013 session.
Legislative Republicans looked more pessimistically at the higher revenue numbers than did Democrats.
Rep. Mike Miller, R-Helmville, urged caution, warning about the volatility of these numbers. In July 2008, he said, the projected state general fund balance or surplus for the next year was at $700 million, but it plunged rapidly when the recession hit.
But Rep. Dick Barrett, D-Missoula, asked Johnson if it also wasn’t possible for the latest current ending fund balances to grow further.
Johnson said that was a possibility.
Sen. Bruce Tutvedt, R-Kalispell, warned that an earlier legislative study concluded that the state would have to spend $116 million a year for the next 30 years to turn around the state pensions. The largest two pensions for teachers and public employees have unfunded liabilities or potential deficits topping $3 billion.
“We haven’t got that retirement elephant in the room in this report,” he said.