Lawmakers see smaller shortfall as session nears

Lawmakers see smaller shortfall as session nears

MATT GOURAS, Associated Press Writer

HELENA (AP) — Lawmakers learned Friday that there will likely be enough money left over from this budget year to help ease a projected shortfall for the next budget period, setting up an argument on whether such a move is wise.

Projections given to the Legislative Finance Committee show that if tax collections don't improve dramatically, and if state spending increases just to cover inflation, there could be a $368 million budget shortfall over the next two-year budget period that starts in the middle of next year.

But thanks to budget cuts put into place this year by Gov. Brian Schweitzer, the infusion of cash from the sale of state coal, more federal money for certain programs and other factors, there could be $236 million left in state coffers by mid-2011.

That is a dramatic improvement from projections early this year that showed a deficit of as much as $63 million could be reached.

The budget report said that personal income tax collection estimates have weakened, while corporation tax collection estimates have strengthened. Tax revenue on oil and gas activity has continued to outpace estimates.

The revenue report offered a few other options for balancing the projected shortfall, such as by delaying efforts to fix the state pension system, skipping increases for health service providers and school funding, or cut agency budgets.

Tax increases seem highly unlikely given the recent history of the Legislature and Schweitzer's opposition to such a move.

Lawmakers meet in January to start writing the budget plan. Schweitzer releases his proposal next month that will serve as the guide.

"Gov. Schweitzer will submit a balanced budget. It will have adequate reserves. It will preserve essential core services and it will not raise taxes," said David Ewer, the governor's budget director.

Some lawmakers are likely to push back against any plans that crop up in the Legislature to build a budget of ongoing spending balanced with a one-time infusion of cash. Such a situation, called a "structural imbalance," means that the amount of spending outpaces tax collections during the budget cycle.

Sen. Dave Lewis, R-Helena, said he expects the argument to linger through the entire session as lawmakers look for ways to avoid cuts.

"It's dangerous. We should be looking at balancing ongoing spending in the next biennium with ongoing revenues in the next biennium," Lewis said. "That will probably be the major policy decision in the session. We might as well kick it off now. Yeah, it's the easy way out — but the easy way out might not be the best long term solution."

HELENA (AP) — Lawmakers learned Friday that there will likely be enough money left over from this budget year to help ease a projected shortfall for the next budget period, setting up an argument on whether such a move is wise.

Projections given to the Legislative Finance Committee show that if tax collections don't improve dramatically, and if state spending increases just to cover inflation, there could be a $368 million budget shortfall over the next two-year budget period that starts in the middle of next year.

But thanks to budget cuts put into place this year by Gov. Brian Schweitzer, the infusion of cash from the sale of state coal, more federal money for certain programs and other factors, there could be $236 million left in state coffers by mid-2011.

That is a dramatic improvement from projections early this year that showed a deficit of as much as $63 million could be reached.

The budget report said that personal income tax collection estimates have weakened, while corporation tax collection estimates have strengthened. Tax revenue on oil and gas activity has continued to outpace estimates.

The revenue report offered a few other options for balancing the projected shortfall, such as by delaying efforts to fix the state pension system, skipping increases for health service providers and school funding, or cut agency budgets.

Tax increases seem highly unlikely given the recent history of the Legislature and Schweitzer's opposition to such a move.

Lawmakers meet in January to start writing the budget plan. Schweitzer releases his proposal next month that will serve as the guide.

"Gov. Schweitzer will submit a balanced budget. It will have adequate reserves. It will preserve essential core services and it will not raise taxes," said David Ewer, the governor's budget director.

Some lawmakers are likely to push back against any plans that crop up in the Legislature to build a budget of ongoing spending balanced with a one-time infusion of cash. Such a situation, called a "structural imbalance," means that the amount of spending outpaces tax collections during the budget cycle.

Sen. Dave Lewis, R-Helena, said he expects the argument to linger through the entire session as lawmakers look for ways to avoid cuts.

"It's dangerous. We should be looking at balancing ongoing spending in the next biennium with ongoing revenues in the next biennium," Lewis said. "That will probably be the major policy decision in the session. We might as well kick it off now. Yeah, it's the easy way out — but the easy way out might not be the best long term solution."