Montana's Employment Losses Slow Growth.

• Author: Johnson, Terry
• Position: State Revenue Report

There are numerous taxes, fees and investment earnings that fund a variety of state services. As shown in Table 1 for fiscal 2020, total general fund collections were $2.53 billion with over 76% collected from income (individual and corporation) and property taxes.

Total general fund collections decreased by $40.3 million or 1.6% from collections received in fiscal 2019. However, this decline is misleading since there were significant one-time revenue transfers authorized by the 65th Montana Legislature that increased collections in fiscal 2019 and an individual income tax accounting error that understated collections in fiscal 2020.

The transfers were monies moved from other state funds to the state general fund. The transfer amounts were included in the revenue category "other sources" and were recorded in fiscal 2018 and 2019. The accounting error was an individual income tax accrual not recorded in fiscal 2020. The unaccrued amount will be recorded as fiscal 2021 collections.

Figure 1 shows the year-over-year change in collections from fiscal 2016 to 2020. The change amounts are shown for both total general fund collections and total general fund collections with the adjustments as discussed previously. With these adjustments, total general fund collections increased by $57.6 million or 2.4% in fiscal 2020. Even with the adjustments, total general fund collections have not increased at the amounts observed in fiscal 2018 and 2019. These increases were driven by robust growth in individual and corporation income taxes. However, the economic impacts of COVID-19 started to show modest growth declines for income taxes in late fiscal 2020 (period ending June 30).

More significant declines in growth rates are anticipated during fiscal 2021 as Montana's employment losses slow the growth in withholding tax receipts, as well as a slowdown in corporate earnings.

Terry Johnson is the former chief revenue forecaster for the state of Montana, retired.

Table 1. Total general fund collections, Montana. Source: Montana's Statewide Accounting, Budgeting and Human Resource System. Fiscal 2016 Fiscal 2017 Fiscal 2018 Revenue Category Collections Collections Collections Top Seven Sources Corporation Tax $118.4 $126.0 $167.1 Individual Income Tax 1,184.8 1,168.2 1,297.8 Insurance Tax 69.3 75.6 75.3 Oil & Natural Gas Tax 39.1 46.3 54.5...