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Projected budget shortfall is $368 million

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It wasn’t all bad news in Helena last week. My committee, Legislative Finance, heard the yearly fire costs for this biennium. We spent just under $2 million dollars. That leaves $22.5 million remaining in the fire suppression account.

We’ve been very lucky the last three years. The forests from Helena to Butte to Lincoln are almost all pine beetle kill. When we have a fire it will be devastating.

I spoke to the director of our Department of Revenue about the property tax problems. Almost all counties have their AB-26 appeals finished. As you can imagine, it’s Lake and Flathead that still have nearly 40 percent of the 2009 appeals open and 90 percent of the 2010 appeals open.

Also, we discussed methods of yearly appraisals. Idaho does this now. There are several bill drafts to repair our property tax system already submitted. I’m working with Senator Tutvedt from Flathead County on a couple now.

Our budget and revenue discussion is called “risk assessment” for good reasons.  To maintain the current level of services the state needs $3,940,000,000. That’s nearly $4 billion dollars.

Our revenue estimate is $3,572,000,000. That leaves a shortfall of $368 million dollars. These estimates are based on actual fiscal year revenue. As always Montana is supported by individual income tax, four times more than any other source.

The only revenue source that has increased is oil and gas production tax, and not by that much. Wyoming and Alaska have no income tax and most of the oil rigs are in North Dakota. This natural resource revenue discussion is long and complicated. We have the same transmission and tax problems with green energy.

One of my major worries is the use of one-time money. During the last session, stimulus money backfilled some of our budget. The federal government has re-authorized some Medicare/Medicaid money (FMAT of $52.7) and this will help us now, but it will probably not exist next year. Our current reserves include more one-time money, the Otter Creek bonus payment ($81.5 million) and the additional education stimulus money ($30.7 million).

Many people have asked me why school trust land and the added stimulus money for education were not added to the education budget. Last session the legislature appropriated the spending levels for all of government, regardless of the source of the money-federal government, state taxes, fees, etc. Each section of government can only spend what was appropriated.

The legislature balances the spending with the income, the best requirement in our constitution. If more money comes in, it goes to the general fund.

Last session Representative Dee Brown from the Flathead had a bill to allow schools to keep additional money from natural resource development on school trust lands. Many of us voted for it, but the big lobbies, MEA-MFT, Quality Schools, etc. worked against this.

The state executive branch decided to tax PPL for streambed rent. PPL had taken this lawsuit to the US Supreme Court. The court hasn’t decided if they will hear the case yet. We know who will really pay this “rent” payment. PPL will pass on the costs to the consumers, of course.

The land board has already decided to spend this money on land acquisition. It will pay much of the Montana Legacy Project land purchases. This project is 149,300 acres for a total price of $95.7 million. One fourth of that is federal money and a little is bonding and habitat funds.

My two-day meeting was long. Please call me for more information. We had a detailed discussion on the unfunded liabilities in our pension funds and measuring performance in state government. We finished with the lawsuit from the governor. This is a waste of money and time. He claims that HB676, the stimulus spending, was unconstitutional. Even if it was, we are not going to make everyone pay back the money.

Call me 849-6096, email or write me at PO Box 233, Dayton, Mont., 59914. I never forget that I work for you.

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