Table Of Content

BUDGET ANALYSIS BIENNIUM 1999 & Overview General Reference January 1997 STATT OnniMPNTS COLLECTION MAR 1 4 ZOO? MONTANA STAIE LiSRARY 1515 E. 6th AVE. HELENA. MONTANA 59620 LEGISLATIVE FISCAL DIVISION "°""1'"PW«1'11I 3 0864 1003 7714 5 BUDGET ANALYSIS 1999 Biennium Overview Presented to the Fifty-fifth Legislature Submitted by The Legislative Fiscal Division Helena, Montana January 1997 Vrf V Digitized by the Internet Archive in 2010 with funding from IVIontana State Library http://www.archive.org/details/budgetanalys191999mont 1 Legislative Fiscal Analyst rl^^^^^^Sn Room 105 • StateCapitol CLAYTON SCHENCK ^^I^^p^S^^^^?^^^^J ^'^ Box 2017 1 Helena, Montana59620-1711 ^'^^^^P^ (406) 444-2986 FAX (406)444-3971 MONTANA LEGISLATIVE BRANCH Legislative Fiscal Division December 1996 Members ofthe Fifty-Fifth Legislature Members ofthe Legislative Finance Committee In accordance with Section 5-12-302, MCA, I submit for your consideration a fiscal analysis ofthe state budget outlook for the 1999 biennium and Governor Racicot's Executive Budget. This multi- volume report includes the "Overview and General Reference" volume that presents a broad fiscal overview and discusses significant fiscal issues as well as fiscal reference material. Revenue forecasts and analysis have been included for the first time in a separate volume entitled "Economic Assumptions and Revenue Estimates." Also a first, "Agency Budgets - Volumes I and 11" are a combined presentation of this office and the Governor's Office of Budget and Program Planning. Those volumes provide the Governor's agency budget recommendations along with the Legislative Fiscal Division's detailed analysis ofthe components ofthe Executive Budget. The combined agency budget volumes are designed to be a working document during the appropriations process. The staffofthe Legislative Fiscal Division look forward to being ofservice to the legislature during We the 1997 session. are here to assist all legislators in obtaining the best possible fiscal information to facilitate setting fiscal policy and appropriations. We welcome any comments you may have regarding the format, content, and usefulness of this report, as they will be helpful in our future efforts to provide fiscal information for legislators. We thank the Office ofBudget and Program Planning and agency stafffortheir excellent cooperation during the budget analysis process and development ofthe joint agency volumes. I cannot adequately express my gratitude to the LFD stafffor the thousands ofextra hours and their personal sacrifice in preparing this analysis. The dedication and hard work ofthe staffare a credit to the legislature and the people ofMontana. Respectfully submitted, 0-^ Oayton Schenck Legislative Fiscal Analyst TABLE OF CONTENTS OVERVIEW StaffAssignments vi Introduction Combined Executive/Legislative Presentation 1 How to Use this Report 2 State Fiscal Outlook 5 General Fund Summary Introduction 7 1997 Biennium General Fund Outlook 7 General Fund Revenue Estimates 9 1999 Biennium General Fund Outlook 12 Differences from Executive Proposal 14 Fund Balance 15 Executive Budget Analysis - Summary Executive Budget Priorities 17 Biennial Budget Comparisons 19 Executive Budget Proposal Present Law Adjustments/New Proposals 24 Executive Revenue/Tax Policy Initiatives 26 Expenditure Proposals 33 Executive Budget Concerns 46 Global Executive Budget Proposals Introduction 48 Supplementals 49 Public School Funding 51 Executive Pay Plan 60 Structural Balance 64 Inflation/Deflation 66 Long-Range Planning Proposals 67 Highways Finance - Declining Fund Balance 68 State Compensation Insurance Fund 69 Resource Indemnity Trust 70 Other Fiscal Issues Introduction 73 Performance Based Budgets 74 Budget Comparisons Methodology 76 Combined Coal Severance Tax Account 78 SB 378 Interim Study 79 Year 2000 Fiscal Impact 84 Fund Balance Adequacy 85 Federal Welfare Reform 87 Public Health and Human Services 88 Reorganizations 89 Unified Prevention Budget 91 III TABLE OF CONTENTS Reference Budget Basics 99 Histor>' ofPublic School Funding 107 Expenditure Limitation 116 Agency Budget Comparisons by Fund 117 ECONOMIC ASSUMPTIONS AND REVENUE ESTIMATES Introduction Economic Overview Major Economic Assumptions Revenue Estimates Trust Funds - Balances and Interest Earnings House Joint Resolution 2 AGENCY BUDGETS- VOLUME 1 Agency Budget Analysis General Government and Transportation Section A Human Services Section B Natural Resources and Commerce Section C AGENCY BUDGETS VOLUME - 2 Institutions and Public Safety Section D Education Section E Long-Range Planning Section F Proprietary Rate Setting and State Fund Section G IV LEGISLATIVE FINANCE COMMITTEE Representative Ed Grady Senator Eve Franklin Representative John Johnson Senator Loren Jenkins, Vice-Chair Representative Royal Johnson Senator Fred Van Valkenburg Representative Matt McCann, Chair Vacant Representative Bob Raney Vacant Representative Tom Zook Vacant LEGISLATIVE FISCAL DIVISION Clayton Schenck, Legislative Fiscal Analyst Terry Johnson, Principal Fiscal Analyst Taryn Purdy, Principal Fiscal Analyst Skip Culver, Senior Fiscal Analyst Pam Joehler, Senior Fiscal Analyst Nan LeFebvre, Senior Fiscal Analyst Roger Lloyd, Senior Fiscal Analyst Mary Longmaid, Senior Fiscal Analyst Jim Standaert, Senior Fiscal Analyst Sandy Whitney, Senior Fiscal Analyst Joanne Chance, Associate Fiscal Analyst Bob Tallerico, Associate Fiscal Analyst Jim Turner, Associate Fiscal Analyst Cindy Weaver, Associate Fiscal Analyst Lisa Mader, Office Manager Shauna Ryan, Secretary