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Montana’s budget basics
According to the National Association of State Budget Officers (NASBO), Montana’s total expenditures in fiscal year (FY) 2020 were $8.3 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2020 were $2.3 trillion, ranging from $4.7 billion in Wyoming to $337.7 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 $9.6 billion in FY 2018 (the most recent year census data were available), or $9,097 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 $9,801.
Montana’s largest spending areas per capita were public welfare ($2,139) and elementary and secondary education ($1,893). 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 $9.8 billion in FY 2018, or $9,228 per capita. National per capita general revenues were $10,071. Montana does not levy a general sales tax. After federal transfers, Montana’s largest sources of per capita revenue were property taxes ($1,711) and individual income taxes ($1,226).
Governor Greg Gianforte, a Republican, was elected in 2020 with 54 percent of the vote. The next gubernatorial election is in 2024.
Republicans control both the House of Representatives (67 Republicans to 33 Democrats) and Senate (31 Republicans to 19 Democrats). Control of the governor’s mansion and each house of the legislature gives Republicans a trifecta in Montana. All Montana House seats are on the ballot in 2022 because representatives serve two-year terms. Senators serve four-year terms; roughly half the senatorial seats are on the ballot in 2022, and the other half will be up for election in 2024.
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 two 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
Montana enacted its FY 2020-2021 biennial budget in May 2019. Over the two-year period, the budget included $14.3 billion in total spending and $5.0 billion in general-fund spending. Then-governor Steve Bullock did not propose a supplemental budget and the state did not make any significant budget changes in calendar year 2020. Governor Bullock did release a FY 2022-2023 budget in November 2020, but this was mostly a political document because his term ended in January 2021.
Governor Greg Gianforte took office in January 2021. That same month, he released his proposed FY 2022-2023 budget and gave his State of the State address. His budget proposes $5.3 billion in general-fund spending. His speech centered on his plan to cut the state’s top individual income tax rate.
For more on Montana’s budget, see
Montana’s economic trends
Montana’s per capita income (per the Bureau of Economic Analysis) was $53,329 in 2020, ranking 31st among the states. It was below both the national average of $59,729 and the Rocky Mountain regional average of $57,543. The state’s median household income (five-year estimate) was $54,970 in 2019, ranking 39th among the states and below the national average of $62,843. Montana’s poverty rate was 13.1 percent in 2019 (five-year estimate), below the national rate of 13.4 percent.
Although Montana’s averages tell a story about the entire state, Montana is composed of diverse localities. For example, the city of Great Falls’s median household income was $46,965, and its poverty rate was 14.7 percent; the city of Helena’s median household income was $61,324, and its poverty rate was 13.7 percent.
Montana’s unemployment rate has historically been below the national average, particularly following the Great Recession. (See how COVID-19 is affecting state employment and earnings data.)
Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. However, Montana does not have enough Black or Latino residents for the Bureau of Labor Statistics to break down its unemployment rate by race.