Montana lawmakers have projected about $3.5 billion dollars coming into the state general fund each year for the 2025 legislative session. The initial estimate was adjusted down by $100 million to be cautious about income tax projections. This projection gives a starting point for lawmakers to begin drafting the state budget, with an upper limit on spending.
By far, the biggest source of general fund revenue is the individual income tax, which brought in $2.2 billion for the 2024 fiscal year. However, there are concerns about a decline in income tax collections for 2025 due to lower capital gains, slowing inflation, and income tax reductions passed in previous legislatures. Additionally, the number of people moving to Montana has decreased since the peak of the pandemic.
Other factors affecting the budget include lower-than-expected collections of oil and gas production taxes and a leveling off of the lodging tax. The redirection of property tax revenue from the general fund to a special revenue account for school equalization funding will also impact general fund revenues.
This revenue estimate is a preliminary figure, and lawmakers will have a better idea of actual revenue midway through the legislative session in March. It will be crucial for legislators to balance the budget and make informed decisions about spending based on the projected revenue.
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