Montana tax collections are on track to meet or exceed projections, but the numbers may be skewed by early filers looking to beat changes to the federal tax law, legislative analysts said Tuesday.
The update released by the Legislative Fiscal Division projects tax collections of $4 million to $13 million above the $2.4 billion forecast in the 2018-2019 Montana budget.
However, those projections include a spike in the number of people paying their individual income taxes and property taxes at the end of 2017. Many of those early filers were looking to avoid a new $10,000 cap in federal deductions for state and local taxes that was included in the tax reform bill passed by Congress.
Analysts say that means the revenue could drop off in the coming weeks and months, and still fall short of the estimate adopted last year by state lawmakers in House Joint Resolution 2.
"Revenues could be below HJ2, but to what extent, we cannot say," said Legislative Fiscal Division spokeswoman Susie Lindsay.
Gov. Steve Bullock called a special session last fall after his budget office projected a $227 million cash shortfall by the end of the two-year budget cycle. The cash crunch has resulted in cuts to health and social services programs that have angered many beneficiaries.
Bullock budget director Dan Villa said his office's revenue projection, which was $137 million below the one adopted by the Legislature, was still "spot on" and noted that the legislative revenue update includes cash transfers that were passed during the special session.
"I'm comfortable the estimate we used to re-balance the state budget ... is right on track," he said. "We have balanced the state books for the remainder of the biennium."