#MTGov Daily Rundown: Bullock Refuses to Address Declining Revenues

Governor Steve Bullock continues argue that Montana's finances are in great shape, while ignoring the very real economic headwinds that the state is facing. State. Sen. Fred Thomas has been leading the charge pointing out that the state faces declining revenues and that Bullock is not keeping his promise of maintaining a $300 million ending fund balance or "rainy day fund."

"When Gov. Steve Bullock took office he inherited a general fund balance of $537 million. Now he has spent it down to an expected $100 million and the next legislative session faces a deficit where revenues will not exceed expenses!" -State Sen. Fred Thomas, Great Falls Tribune, 8/26/2016

"Yet, as he’s running for re-election, Gov. Bullock continues to try and paint a rosy picture of Montana’s economy and fiscal situation. He is still saying that Montana “has a $300 million rainy day fund.” With all due respect to the governor, we had a $300 million ending fund balance, but he spent it.

The governor’s handling of state finances may have now put the state in deficit position." -State Sen. Fred Thomas, Great Falls Tribune, 8/26/2016

Here are the facts:

• At the end of FY13 (when Bullock took office), the state had a $537 million surplus - Missoulian, 9/26/2013
• For FY16, actual revenue came in $141.5 million UNDER projections. Even more disturbingly, the state took in 78.3 million LESS than it did in FY15. (LFD)
• At the beginning of FY16, the state's beginning fund balance was $455 million. At one point, the ending fund balance was projected to be $276 million. Then it was revised downward to $166 million. Now it's been revised downward again to around $150 million and could go as low as $100 million. Governor Bullock has squandered more than three-quarters of the rainy day fund. (LFD)
• Under Bullock, state general fund spending has increased more than 25% under Bullock, a total of more than $800 million. (HB 2)
• Montana has now experienced two consecutive quarters of negative economic growth. -Billings Gazette, 7/29/2016

The most recent legislative memo on revenues continues to paint a bleak picture of where state finances are headed.

"The ending fund balance for fiscal year 2016 was $255 million, or $99 million less than anticipated, according to an Aug. 25 memo prepared by the Legislative Fiscal Division, adding that figure was expected to dip down to $153 million by fiscal year 2017.

“Actual revenues in FY 2016 were $142 million less than anticipated in (House Joint Resolution 2, the state budget bill),” Amy Carlson, legislative fiscal analyst, states in her memo to Legislative Council members. “Actual expenditures were $41 million lower than anticipated and prior year adjustments netted a positive impact to ending fund balance of $2 million.” -Great Falls Tribune 8/29/2016

The situation has steadily gotten worse. Older projections said the fund would fall as low as $160 million by the end of the biennium despite being projected to be over $300 million.

“Montana’s general fund is nearly 4 percent behind projections, with oil and gas tax receipts down by more than half. The slowdown amounts to more than $67 million the government had counted on. What’s more, fluctuating prices at gas pumps are translating to budgetary uncertainty.” -Associated Press, 5/10/2016

Montana is already starting to feel the effects with funding for school libraries taking a notable hit.

“But as revenue directed to Montana libraries from the state’s coal severance tax loses steam, public and school libraries will lose access to EBSCO, a collection of databases. Billings’ high school librarians strongly oppose the move.

In January, the Montana State Library found out it would be losing $46,000 in expected tax revenue for the current 2015-17 budget. In mid-May, another $166,000 was cut.” -Helena Independent Record, 6/5/2016