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Montana’s Messy Revenue Forecasting System

After the State Legislative Interim Committee on Revenue and Transportation failed to agree on a revenue projection on Monday, Nov. 19, many have been asking why the legislature and the governor’s office have such different numbers in their projections.

Chief revenue forecaster for the legislature, Terry Johnson has worked in both foresting offices and says not all states have the same political problems as Montana does when it comes to picking a projected revenue. “It is pretty fascinating,” says Johnson, “there are a lot of states that totally remove revenue projection from the political process.”

In Montana, revenue forecasts are hyper-politicized by both the legislative and executive branches as each group tries to influence future budget planning. In Montana’s system, both the Governor’s office and the Legislature hire economists to come up with a revenue forecast (all of this work, of course being paid for by taxpayers). After the numbers are produced then the legislature picks one to serve as a framework to plan the State’s budget. The two produced numbers are nearly always in disagreement. For example, a relatively insignificant $3 million dollars difference caused the breakdown this year.

Instead of the current process, many other states elect a non-political firm to produce a  revenue forecast. For example, Montana could use the Bureau of Business and Economic Research.

The difficulty in getting the government to agree to a new forecasting system  is the problem. Why? Because under the current system each branch of government has the chance to flex its muscles at the public’s expense. The Governor’s office gets to use the current system to lobby for its future budget plans, while the legislature gets to hem and haw and tout the fact that they hold the state’s purse strings.

Thus far, despite the gridlock, neither of Montana’s political branches has shown much interest in doing away with the current revenue forecasting model. But who knows, maybe things will change.

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