General Fund Outlook 2011 and 2013 Biennium Terry W. Johnson - - PDF document

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General Fund Outlook 2011 and 2013 Biennium Terry W. Johnson - - PDF document

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General Fund Outlook 2011 and 2013 Biennium Terry W. Johnson Principal Fiscal Analyst Legislative Fiscal Division (LFD ) June 14, 2010 A Report to the Legislative Finance Committee 1 Presentation Outline Current Revenue Trends

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General Fund Outlook 2011 and 2013 Biennium

Terry W. Johnson Principal Fiscal Analyst Legislative Fiscal Division (LFD)

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June 14, 2010 A Report to the

Legislative Finance Committee

Presentation Outline

  • Current Revenue Trends
  • Individual Income Tax
  • Corporation Income Tax
  • Revised 2011 Biennium Ending Fund Balance
  • 2013 Biennium Projected Ending Fund Balance
  • Summary

2

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Fiscal 2010 To Date Summary General Fund Revenue Comparison

  • Through May 31st FY 2009

$ 1,446.3 M

  • Through May 31st FY 2010

$ 1,217.3 M

  • Current Change and Rate (11 months) $ -229.0 M -15.8%
  • HJ 2* Growth and Rate (Full Year) $ -35.1 M -1.9%

3 * Legislature’s Revenue Estimating Resolution + Legislation

Fiscal 2010 To Date Summary By Significant Revenue Category

Change Percent Category In Millions Change Individual Income Tax (120.1)

  • 16.78%

Corporation Income Tax (80.4)

  • 55.11%

Oil & Gas Production Tax (19.5)

  • 30.05%

Vehicle Fees/Taxes 0.2 0.25% General Fund Revenue Collections Eleven Month Comparison - FY 2009 to FY 2010

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Ve c e ees/ a es 0.

  • 0. 5%

TCA Interest (12.2)

  • 84.38%

Video Gaming Tax (7.3)

  • 15.50%

Remaining Sources 10.3 2.74% Total ($229.0)

  • 15.83%
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Why is Revenue Down?

  • Employment
  • Wages
  • Non-Wage Income Components
  • Capital Gains Income
  • Interest, Dividend and Other Investment Income

Business & Partnership Income

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  • Business & Partnership Income
  • Corporate Profitability

Non-Wage Income Trends

200 250 300 350 400 450 500 4,000 5,000 6,000 7,000 8,000 9,000 10,000

Non-wage Income & Est./Current Year Payments

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* FY 2009 Includes a large estimated payment received in January

50 100 150 1,000 2,000 3,000 198619871988198919901991199219931994199519961997199819992000200120022003200420052006200720082009 Non-wage Inc (CY Data)

  • Est. & Current Year Pymts (FY Data)
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Growth Trends of Non-Wage Income

0 0% 10.0% 20.0% 30.0% 40.0%

Non-wage Income & Est./Current Year Pymt. Growth

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* FY 2009 Includes a large estimated payment received in January

  • 20.0%
  • 10.0%

0.0% 2002 2003 2004 2005 2006 2007 2008 Non-wage Inc (CY Data)

  • Est. & Current Year Pymts (FY Data)

Individual Income Tax Comparison

Through Through 5/31/2009 5/31/2010 Dollar Percent Revenue Description FY 2009 FY 2010 Change Change Withholding 569,292,407 564,091,691 (5,200,716)

  • 0.91%

Mineral Withholding 15,120,674 11,145,496 (3,975,178)

  • 26.29%

Estimated Payments 218,055,733 150,143,355 (67,912,378)

  • 31.14%

C t Y P t 128 414 816 104 155 821 (24 258 995) 18 89% Individual Income Tax Comparison - FY 2009 to FY 2010

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* FY 2009 Includes a large estimated payment received in January

Current Year Payments 128,414,816 104,155,821 (24,258,995)

  • 18.89%

Audit Revenue 23,998,135 28,433,066 4,434,931 18.48% Refunds (239,238,129) (262,383,410) (23,145,281) 9.67% Total $715,643,636 $595,586,019 ($120,057,617)

  • 16.78%
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Fiscal 2010 Summary Individual Income Tax Estimated Payments

‐$30 ‐$20 ‐$10 $0 $10 $20 $30

Year over Year Change in Estimated Payments Individual Income Tax Collections Based on Data Through May (Millions)

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* FY 2009 Includes a large estimated payment received in January

FY 2008 FY 2009 FY 2010 Change $19.441 $11.280 ($67.912) ‐$80 ‐$70 ‐$60 ‐$50 ‐$40 $30

Fiscal 2010 Summary Individual Income Tax Refund %

10% 15% 20% 25% 30%

Refund % of Total Individual Income Tax Collections Based on Data Through May

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FY 2007 FY 2008 FY 2009 FY 2010 Refund % 20.20% 22.84% 25.05% 26.85% 0% 5% 10%

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Corporation Income Tax Comparison

Through Through 5/31/2009 5/31/2010 Dollar Percent Revenue Description FY 2009 FY 2010 Change Change Current Year Payments 48,728,967 31,793,393 (16,935,574)

  • 34.75%

i d ( ) Corporation Income Tax Comparison - FY 2009 to FY 2010

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Estimated Payments 92,811,571 53,561,039 (39,250,532)

  • 42.29%

Audit Revenue 24,793,817 13,463,151 (11,330,666)

  • 45.70%

Refunds (20,351,830) (33,284,619) (12,932,789) 63.55% Total $145,982,525 $65,532,964 ($80,449,561)

  • 55.11%

Fiscal 2010 Summary Corporation Income Tax Estimated Payments

($25) ($20) ($15) ($10) ($5) $0

Year over Year Change in Estimated Payments Corporation Income Tax Collections Based on Data Through May (Millions)

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FY 2008 FY 2009 FY 2010 Change ($16.277) ($6.072) ($39.251) ($45) ($40) ($35) ($30)

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Fiscal 2010 Summary Corporation Income Tax Refund %

20% 25% 30% 35% 40%

Refund % of Total Corporation Income Tax Based

  • n Data Through May

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FY 2007 FY 2008 FY 2009 FY 2010 Refund % 11.82% 14.37% 12.24% 33.68% 0% 5% 10% 15%

Fiscal 2010 Summary Oil Production Tax - Production

4.0 5.0 6.0 7.0 8.0 9.0 10.0 illions of Barrels

Montana Oil Production By Calendar Quarter 14

2005: 1 2005: 2 2005: 3 2005: 4 2006: 1 2006: 2 2006: 3 2006: 4 2007: 1 2007: 2 2007: 3 2007: 4 2008: 1 2008: 2 2008: 3 2008: 4 2009: 1 2009: 2 2009: 3 2009: 4 7.354 7.986 8.517 8.822 8.768 8.990 9.274 9.164 9.042 8.720 8.744 8.638 8.559 7.857 7.723 7.958 7.500 7.397 6.849 6.527 0.0 1.0 2.0 3.0 M

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Fiscal 2010 Summary Oil Production Tax – Wellhead Price

$60 $80 $100 $120 $140

  • llars per Barrel

Montana Wellhead Oil Price By Calendar Quarter 15

2005: 1 2005: 2 2005: 3 2005: 4 2006: 1 2006: 2 2006: 3 2006: 4 2007: 1 2007: 2 2007: 3 2007: 4 2008: 1 2008: 2 2008: 3 2008: 4 2009: 1 2009: 2 2009: 3 2009: 4 46.28 48.88 59.21 55.45 53.24 61.38 63.67 50.13 49.55 60.03 70.14 79.93 84.71 117.3 108.2 44.72 33.97 50.59 59.32 66.67 $0 $20 $40 Do

Fiscal 2010 & FY 2011 Summary Estimated Revenue Changes

Category Current Year Trend FY 2010 FY 2011 Biennium Individual Income Tax ($118.1) ($95.0) ($213.1) Corporation Income Tax (58.2) (52.7) (110.9) Oil & Gas Production Tax 21.3 12.3 33.6 TCA Interest (4.5) (6.4) (10.9) Vid G i T (11 5) (11 1) (22 6) Estimated Revenue Changes From HJ 2 (Millions)

16 *Not updated with current trends

Video Gaming Tax (11.5) (11.1) (22.6) Vehicle Fees/Taxes ? (7.0) (4.8) (11.8) Remaining Sources ? (4.1) (10.1) (14.2) Current Estimate ($182.1) ($167.8) ($349.9)

February Estimate ($182.1) ($167.8) ($349.9)

Change From February Estimate $0.0 $0.0 $0.0

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2011 Biennium General Fund Revenue Impact

  • n Legislative Projected Balance

Biennium Legislative Projected Balance $282.4 FY 2009 Balance Change 5.0 N R Ch (349 9) 2011 Biennium General Fund Outlook

In Millions

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Net Revenue Changes (349.9) Fund Balance Adjustments (0.5) Supplementals ? New Projected Balance * ($63.0)

*Excludes Otter Creek, PPL and spending reductions as proposed by the Governor. *Also excludes FMAP Extension and Transfers.

2011 Biennium General Fund Revenue Impact

  • n Legislative Projected Balance

$50 $100 $150 $200

2011 Biennium General Fund Balance Progression As Issues Change

Occurred Legislative In Process Pending

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Ending Balance Tier 1 FMAP Clawback Spending Reductions Legislative / Judicial Otter Creek Lease PPL River Beds FMAP Extension Transfers Elliminated Est.Amount $23.1 $8.4 $40.5 $1.2 $81.5 $18.4 $45.0 $21.0 New Balance ($63.0) ($39.9) ($31.5) $9.0 $10.2 $91.7 $110.1 $155.1 $176.1 ‐$100 ‐$50 $0

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2013 Biennium General Fund Projected Balance (Millions)

Biennium Beginning Balance * $91.7 LFD Revenue Estimates 3,571.5 Present Law Services (3,968.4) 2013 Biennium General Fund Outlook

In Millions

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*Includes Otter Creek and spending reductions as proposed by the Governor. *Excludes PPL, FMAP Extension and Transfers.

Supplementals ? Fund Balance Reserve ($100) Potential Deficit ($405.2) Budget Gap ($396.9)

General Fund Revenue Year over Year Percent Change Percent Change

0% 5% 10% 15%

Total General Fund Revenue Year over Year Percent Change

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1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 10.9% 6.8% -6.4% 4.9% 3.0% 2.4% 4.9% 3.4% 8.8% 9.1% -0.3% -1.5% 10.9% 10.8% 11.6% 7.1% 6.8% -7.5% -12.0% 4.5% 5.0% 4.7% 4.0% 4.3%

  • 15%
  • 10%
  • 5%

Fiscal Year

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General Fund Cash Balance

Period Cash In Bank Monthly Change Cash In Bank Cumulative Cash Variations * Current Year Only Beginning 446,407,475.56 446,407,475.56 07/30/09 (6,614,483.38) 439,792,992.18 (6,614,483.38) 08/31/09 (74,152,696.93) 365,640,295.25 (80,767,180.31) 09/30/09 (41,150,783.45) 324,489,511.80 (121,917,963.76) 10/31/09 5,562,359.78 330,051,871.58 (116,355,603.98) 11/30/09 (92,094,829.66) 237,957,041.92 (208,450,433.64) 12/31/09 6 989 272 24 244 946 314 16 (201 461 161 40) General Fund Cash Balance By Month - FY 2010

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12/31/09 6,989,272.24 244,946,314.16 (201,461,161.40) 01/31/10 88,502,097.97 333,448,412.13 (112,959,063.43) 02/28/10 (54,953,076.58) 278,495,335.55 (167,912,140.01) 03/31/10 (68,328,633.38) 210,166,702.17 (236,240,773.39) 04/30/10 80,733,132.38 290,899,834.55 (155,507,641.01) 05/31/10 (120,528,915.59) 170,370,918.96 (276,036,556.60) 06/14/10 122,051,105.02 292,422,023.98 (153,985,451.58) * Cash variation represents the net change in cash for the year without including the carryover cash balance. As of the today, the state general fund has expended $154 million more than deposited as revenue.

Long-Term General Fund Outlook Considerations

  • Maintaining Structural Balance
  • Maintaining An Adequate Ending Fund Balance
  • Retirement System Funding
  • Health Care Reform Impacts
  • L

f F d l F d

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  • Loss of Federal Funds
  • Aging Population Impacts
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Questions ? Q

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