Montana’s budget basics

According to the National Association of State Budget Officers (NASBO), Montana’s total expenditures in fiscal year (FY) 2019 were $7.2 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2019 were $2.1 trillion, ranging from $4.5 billion in South Dakota to $311.3 billion in California.

Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.

Per the US Census Bureau, Montana’s combined state and local direct general expenditures were $9.5 billion in FY 2017 (the most recent year census data were available), or $9,002 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $9,449.

Montana’s largest spending areas per capita were public welfare ($2,121) and elementary and secondary education ($1,770). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.

Montana’s combined state and local general revenues were $9.2 billion in FY 2017, or $8,728 per capita. National per capita general revenues were $9,573. Montana does not levy a general sales tax. After federal transfers, Montana’s largest sources of per capita revenue were property taxes ($1,567) and charges ($1,121), such as state university tuition and highway tolls.

Montana’s politics

Governor Steve Bullock, a Democrat, was elected in 2016 with 50 percent of the vote. The next gubernatorial election is in 2020.

Montana has a divided government. Republicans control both the House of Representatives (58 Republicans to 42 Democrats) and Senate (30 Republicans to 20 Democrats). All Montana House seats are on the ballot in 2020 because representatives serve two-year terms. Senators serve four-year terms; roughly half the senatorial seats are on the ballot in 2020, and the other half will be up for election in 2022.

Montana’s budget institutions, rules, and constraints

Montana uses a biennial budget. The legislature must pass a balanced budget and is prohibited from carrying a deficit over into the following year. The state has no further tax and expenditure limits, and there are no debt limits on either authorized debt or debt service incurred by the state.

(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)

Montana’s recent fiscal debates

• Montana expanded Medicaid eligibility under the Affordable Care Act in 2015. However, the legislation, known as the HELP Act, was set to terminate on June 30, 2019. Voters rejected a 2018 ballot initiative that would have continued the expansion and paid for it with a 2 dollar per pack increase in the state’s cigarette tax. Instead, Governor Bullock and the legislature agreed to continue Medicaid expansion until 2025 with legislation that increased premiums for many beneficiaries and added work requirements to its eligibility rules. However, in November 2019, Montana delayed the implementation of work requirements. Federal courts have struck down similar requirements in other states.
• In 2017, Montana enacted an earned income tax credit (EITC). Montana’s EITC is refundable and is 3 percent of the federal credit.

Montana’s current budget

Governor Steve Bullock released his proposed FY 2020–21 budget in November 2018. It contained several education initiatives, such as $30 million for preschool programs and a freeze on tuition at the state’s universities. Governor Bullock also proposed increasing taxes on tobacco, alcohol, accommodations, and car rentals. In his 2019 state of the state address, Governor Bullock praised the state’s Medicaid expansion.

The legislature passed its budget in May. The enacted budget generally followed the governor’s recommendations but did not include the governor’s proposed new spending on early education or any of his proposed tax increases. However, the legislature passed legislation legalizing sports betting in the state.

For more on Montana’s budget, see

• the Governor’s Office of Budget and Program Planning,
• the Montana Department of Administration,
• the Montana Transparency in Government Portal, and
• the Montana Legislative Fiscal Division.

Montana’s economic trends

Montana’s per capita income (per the Bureau of Economic Analysis) was $47,120 in 2018, ranking 34th among the states. It was below both the national average of $53,712 and the Rocky Mountain regional average of $51,226. The state’s median household income (five-year estimate) was $50,801 in 2017, ranking 39th among the states and below the national average of $57,652. Montana’s poverty rate was 14.4 percent in 2017 (five-year estimate), below the national rate of 14.6 percent.

Although Montana’s averages tell a story about the entire state, Montana is composed of diverse localities. For example, the city of Livingston’s median household income was $38,807, and its poverty rate was 15.3 percent; the city of Sidney’s median household income was $59,958, and its poverty rate was 5.2 percent.

Montana’s unemployment rate has historically been below the national average, particularly following the Great Recession.