HELENA — At least for the time being, Montana’s public coffers are well-stocked to weather the coronavirus pandemic, lawmakers and the governor’s budget director said Monday, meaning it’s unlikely that state government will run into an immediate budget crunch as it tries to contain the COVID-19 outbreak and respond to the virus’ economic impact.
That could change, however, if the crisis drags out long enough that response efforts drain emergency funds, or if economic fallout cuts into the state’s collection of income taxes, natural resource taxes, and other revenue sources over the coming months.
“The unexpected has caught us at a good time in terms of the state’s finances,” said Rep. Nancy Ballance, R-Hamilton, who co-chaired the 2019 House Appropriations Committee.
“Clearly, there’s uncertainty,” said state Budget Director Tom Livers. “But the really good news is that we’re going into this period in good shape.”
While the state’s fiscal picture, like most other aspects of the outbreak, has the potential to change rapidly, a March 18 report from the Legislative Fiscal Division said the state’s general fund is expected to reach the end of the 2020 fiscal year in June with a healthy $291 million. That’s well above its minimum required balance of roughly $100 million.
Other accounts the state can tap if necessary are also well-stocked, Livers said, including $118 million in the state’s rainy day fund. An account dedicated for firefighting money holds $55 million, and an additional $16 million is allocated for emergency spending by the governor.
The general fund figure, however, assumes the state’s revenues match the official projection adopted by the 2019 Montana Legislature. With the economy booming, tax collections had been higher than expected, but may now falter as illness and anti-pandemic measures like restaurant shutdowns take a toll on the economy. Also unclear, as of Monday afternoon, was the fate of a federal stimulus package under negotiation in Washington, D.C. — action that could include assistance for state governments.
If state emergency spending and revenue losses reach into the hundreds of millions, pushing the general fund below its minimum reserve balance of approximately $100 million, Gov. Steve Bullock could call lawmakers to Helena to patch up the budget with a special legislative session, as he did in 2017. With coffers currently full and the prospect of federal stimulus, lawmakers and executive branch officials said that’s unlikely to be necessary before the regularly scheduled 2021 session.
“The state is in a good position,” Ballance said. “As ideas come forward, we have the ability to put money toward those ideas and help businesses, help families, help employees to get through this crisis.”
Lawmakers created the rainy day fund, formally called the Budget Stabilization Reserve Fund, in 2017 to help state government bank revenues in flush times. Before the legislation passed, Montana was one of three states without a formal rainy day fund, according to the Associated Press.
Also healthy is the state’s unemployment insurance fund, which currently contains $360 million — up from $107 million in 2011, in the aftermath of the Great Recession. One of the primary pandemic assistance measures implemented so far at the state level is action announced by the governor last week that expedites unemployment claims for Montanans forced out of work by the outbreak.
Montanans filed 14,611 unemployment benefit claims with the Montana Department of Labor & Industry between March 16 and March 22, according to the agency.
“Just because state finances are in decent shape going into this doesn’t mean everything is great,” Livers said.