Legislature had the money; proud not to spend it.

Sep. 27 - The 2011 legislature had plenty of cash to spend. Legislators just wouldn't do it.

MEA-MFT, our allies, and the governor’s said repeatedly throughout the 2011 session: the money is there to invest in public services and public employees. But the legislative majority chose to cut anyway.


“To elect the same legislature come November 2012 is to suffer the same outcome we suffered this year - a legislature awash in new revenue but determined NOT to invest it meaningfully in state employee base pay, university funding, k-12, and private as well as public sector job creation,” said MEA-MFT President Eric Feaver.

“All wrong. The Tea Party Republican dominated legislature was all wrong for Montana and the dedicated public servants we represent who do the Work that Matters.” 

Revenues prove Legislature wrong on spending

By CHARLES S. JOHNSON IR State Bureau | Tuesday, September 27, 2011

Saying “we told you so,” Gov. Brian Schweitzer’s budget director and Democratic legislators said Monday that actual tax collections for the past fiscal year prove they were right, while the more pessimistic estimates by Republicans and the legislative staff were wrong.


As a result, the net revenues for the year that ended June 30 turned out to be about $76 million higher than what the legislative fiscal staff projected and that the Republican House and Senate majorities used in crafting the budget. The total general-fund revenue the state collected was $1.78 billion for the year.


Democrats said the lower revenues resulted in the Legislature refusing to fund negotiated pay raises for state employees and making cuts in some human service budgets.


Some Republicans at the Legislature’s Revenue and Transportation Interim Committee defended setting low revenue estimates as the cautious thing to do in economically uncertain times.


“I think we were correct to take a conservative view, keep the grain in the bin, as the governor says,” said Sen. Bruce Tutvedt, R-Kalispell. “I think we were prudent and did the right thing.”


Disagreeing was Schweitzer’s budget director, David Ewer, who said he had publicly disputed both the legislative revenue estimates and the methodology throughout the session.


“It is my continued hope that we all want accurate revenue estimates,” Ewer said. “I hope that that’s the goal I hear that there’s some praise for having them conservative. I think accuracy is more important.”


Ewer warned the committee, “If you as a Legislature continue to accept the status quo methods, I think you’re having revenues that are undercounted. And that’s bad business.”


He predicted the state would see “dramatically higher” revenues for the fiscal year ending in mid-2012 than the Legislature had forecast.


Responding to Tutvedt, Sen. Christine Kaufmann, D-Helena, said she sees no need to feel proud of revenue estimates that turned out to be so conservative.


“We didn’t meet the state pay plan, we didn’t do the bonding that could have put people to work, we cut provider rates,” she said. “We accepted bad revenue estimates.”


Ewer urged the committee to seek revised revenue estimates sooner rather than later for the upcoming two years. For July and August, the first two months of fiscal 2012, general fund revenue is up 18 percent over the legislative estimates.


Revenue estimates are critical numbers because they ultimately determine how much money the Legislature can spend in appropriating money for the next two years.


Terry Johnson, the Legislature’s chief revenue forecaster, revised the estimated state surplus, or ending fund balance, projected as of mid-2013 at $265.1 million, compared with the $150.5 million that legislators budgeted for earlier this year.


As for the $76 million in higher net revenues for fiscal 2011, Johnson said income taxes were 7 percent higher than projected, while corporate taxes were 22.3 percent higher.


Johnson said the legislative fiscal staff had received conflicting economic forecasts from private national forecasting firms and a federal government source about Montana’s economy.


“The conclusion at this point is we have some research to do,”he said.


Sen. Ron Erickson, D-Missoula, said Johnson had voiced surprise over how much additional money the state collected in taxes last year.


“A lot of us aren’t surprised,” Erickson said. “The budget director and a number of us thought the revenue estimates should have been higher. We were coming out of a recession.”


Later, Johnson said, “Budget Director Ewer and some members of this committee were correct. I don’t disagree. That’s why I pointed it out in the report. There is a disconnect somewhere, and we need to figure it out so it doesn’t happen again.”


The committee chairman, Rep. Roy Hollandsworth, R-Brady, defended the lower revenue estimate.


“We’re responsible for the votes that we take,” he said. “We’re in the black in this state. We’re one of the very few states, and I’m proud of my votes.”

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