Budget surplus is ‘smoke and mirrors’
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About a month ago, our governor was proud to announce a huge $400 million-plus cash surplus. He said the cash came from things like a decision not to print phone books and minimizing governmental travel costs. The announcement tries to make it look like our state has extra cash lying around. But wait.
Just how much of this so-called “surplus money” does the state of Montana have?
Our unfunded liability in the public employees and the teachers’ retirement accounts is $3.8 billion. That, alone, puts us about $3.4 billion short, right? Not good. Lots of fixes in the works and most include my bill from last session.
There are other concerns. What will be the final wildfire bill? The state has $4.1 million left over from last year. The estimated costs for this year are already $30 million (we can bill the feds for $5 million).
In forecasting the budget, our state government uses an economic forecasting firm, IHS Global Insight, to predict our financial future. The firm can only use information it has available and has to estimate many things, for example, the price of oil in February 2013, or the value of Montana grain. Nonetheless the firm does predict slow growth throughout the US economy, only 2.1 percent in 2012, 1.8 percent in 2013, and 2.8 percent in 2014. (It gives Montana a bit rosier picture than the rest of the states because of our oil and gas development).
Global Insight calculates the risk of a US recession at 25 percent. It also has to forecast political events. Who can guess whether the Eurozone recession will deepen, or whether our lame-duck Congress will postpone budgeting and raise the debt ceiling?
This brings us to our next issue. How reliable are federal dollars? The Council of State Governments estimates that Montana will see a 9-percent reduction in state and local grant programs. Where do we cut? The impact of the Affordable Care Act, often called Obamacare, was estimated by the Kaiser Commission of Medicaid and the Uninsured. It found that for Montana, federal dollar increases would be $2 billion, and our state increases would be $100 million.There are serious infrastructure concerns across our state, especially in our oil and gas communities. Sidney alone needs at least $21 million for capital improvements like water, wastewater, schools and police. There are several plans to reform our property tax system in the works. Plans to make annual or biennial appraisals will likely pass. Currently the state share of property taxes is 20 or 30 percent of the total. Maybe all property taxes should stay in their locales? Before jumping on the fat checkbook bandwagon, we need to understand that we have obligations – that having checks doesn’t equal having money.
Please continue to contact me with any comments or concerns. Remember that I work for you. My cell number is 253-8766, and my email is jannataylor@montana.com.
