State Revenue Report: Another Strong Growth Year.

• Author: Barkey, Patrick M.

After experiencing a pronounced, down-up cycle in general fund revenues for the previous two fiscal years, the state treasury enjoyed a second consecutive year of strong revenue growth in fiscal year (FY) 2019, which ended in June. The growth surge in the U.S. economy has clearly shown up in Montana's bottom line.

The overall growth was propelled by strong growth in Montana personal income tax revenues, the state's largest source of tax revenues. The double-digit percent growth pushed FY19 collections past $1.4 billion, an increase of $131.2 million over a strong year in FY18. Almost every component of income tax revenues showed strength, with growth in withholding ($65.1 million) and current tax payments ($49.5 million) contributing the most to overall growth.

Growth in other general fund tax revenue sources was more restrained, but generally positive. The exception to this pattern was the hard to predict corporation income tax, which grew slightly faster than personal income tax revenue growth. Even some natural resource tax revenues, most notably royalties from federal lands distributed to the state and proceeds from metal mines, showed significant growth. Stagnation in crude oil prices and challenges for coal producers kept production taxes for those commodities in check. Tourism and visitor-related taxes on rental cars and hotel rooms were up sharply.

In an income tax-dependent state like Montana, it is difficult to assess a revenue year until after the spring. But thus far, revenues are continuing to run strong in FY20, an indicator of continued expansion in the state economy.

Patrick M. Barkey is director of the Bureau of Business and Economic Research at the University of Montana.

Table 1. Montana general fund revenue sources, $ millions. Source: Montana Legislative Fiscal Division. Top Seven Sources FY 2015 FY 2016 FY 2017 Individual Income Tax 1,175.7 1,184.8 1,168.2 Property Tax 247.9 257.1 260.2 Corporation Income...