State's ending fund balance less than expected, memo says

HELENA — 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.”

Sen. Fred Thomas, R-Stevensville, who heads the state Revenue and Transportation Interim Committee, has criticized past budget projections provided by the governor’s office. He said Monday the numbers, as provided by the Legislature’s Legislative Fiscal Division, are getting worse and will force state officials to make tough decisions regarding funding services such as schools.

“We will begin the 2018 biennium with about $100 million in the bank,” he said, adding the administration of Democratic Gov. Steve Bullock had failed to tap into natural resource revenues that would help the state.

“We don’t have to cut at this point in time, given the numbers,” he said, but said lawmakers in the 2017 legislative session “will have to cut spending to make the budget balanced.”

State Budget Director Dan Villa rejected those claims and said J.P. Morgan has named Montana the most fiscally prudent state in the country. He said the budget, passed with bipartisan support, has a responsible ending fund balance, provides structural balance and makes responsible investments that benefit Montanans.

Earlier this month Villa said with $2.1 billion, in fiscal year 2016 had its second best revenue year in history and a federal agency reporting the state’s economy has shrunk for the second straight quarter.

In her memo, Carlson said the Legislative Fiscal Division’s current estimate of FY 2017 revenues are $112 million less than House Joint Resolution 2 or $44 million less than the Legislative Fiscal Division June 2016 General Fund Outlook Report.

Further details were not provided.

Earlier this month Thomas and Rep. Jeff Essmann, the chairman of the Montana GOP, both noted that natural resource revenues are down and encouraged people to vote for GOP gubernatorial candidate Greg Gianforte. They said he would encourage more timber and coal projects in the state.

Thomas re-emphasized that claim Monday.

“Every natural resource sector is down below projections,” he said. “The Obama administration is attacking coal industry in Montana with a fever. This Democratic administration is sitting on the side and letting stuff happen.”

“If you are good with no good-paying jobs and poor schools, then continue with track we are on,” he said. “I am not good with that.”

Villa said taxpayers have seen savings during Bullock’s term.

“The Bullock administration has instituted $102,894,655 in general fund savings over the last four fiscal years,” he said. “Examples include: more aggressive management of prescription drug rebates in the Medicaid program, implementation of energy and cost-saving measures in state buildings, and renegotiations of state IT contracts – all to save taxpayer dollars.”

The budget office is updating revenue projections as part of the executive planning process for the 2019 biennial budget, a state official said.

Thomas said his committee meets Sept. 7 and 8 and will get another budget update.

“We need to be letting the Legislature know what is coming at them in January as far as a budget goes, and it looks seriously out of balance,” he said.

“It does not matter what money is in the bank today,” he said. “The key is where we are headed in the future and the trends are bad.”