The state of Montana’s General Fund tax revenues declined in 2024, according to Terry Johnson, former chief revenue forecaster for the state of Montana, now retired.

In Fiscal 2024, total general fund revenue collections were $3.32 billion, with 76.9% collected from income (individual and corporation) taxes. These revenues are used to finance a variety of state services, but most are used for education, human service, and public safety programs, explained Johnson in an article included in the Bureau of Business and Economic Research’s report included as information for their annual Economic Outlook Seminar.

Total General Fund revenue collections decreased by $620.8 million, or 15.7 %, from collections received in fiscal 2023.

This change was unusually large, according to Johnson, due to a decline in property taxes, which were $338.8 million in 2023., “Other Sources” was down $249.9 million, and revenue collected from natural resources (including oil and natural gas tax) declined $31.4 million, for a total decline of $620.1 million or 15.7 percent.

The property tax decline was due to legislative changes adopted by the 68th Legislature that redirected most of these revenues to a non-general fund account for support of public education.

In addition, there is a non-general fund account called the Budget Stabilization Reserve Fund (BSRF), which is used to provide funding for the general fund account if revenue collections fall below expectations. The BSRF is funded from general-fund monies that are above a specified amount at the end of each fiscal year.

The natural resource revenue decline was due to price and production fluctuations for most of the fossil fuel types.

The decline of $10.4 million in individual income tax collections can be explained by the fact that in 2024 there were no more federal payments to Montana citizens and businesses which were enacted by Congress following the impacts of Covid-19.

The economic statistics maintained by the U.S. Bureau of Economic Analysis provide measures of transfer payments to Montanans as well as wage and salary income of employees. According to their data the amount of change increased by $2.9 billion from 2019 to 2020, a 27.4% increase with a further increase of $1.2 billion from 2020 to 2021 for a total increase of $4.1 billion over the two-year period. Once the stimulus payments were eliminated, transfer payments declined by $1.6 billion from 2021 to 2022.

Transfer payments from 2022 to 2023 have now returned to a more normal growth pattern observed prior to 2020.

The pandemic also had an impact on the workforce available for Montana businesses. Throughout Montana there were numerous posted signs indicating businesses were searching for workers.

This workforce demand increased the wage offerings of businesses.

Higher wages increased total state wage and salary incomes. Total wage income increased by $2.6 billion or 10.9% from 2020 to 2021 and $2.5 billion or 9.4% from 2021 to 2022. Wage growth from 2022 to 2023 has moderated and is now closer to historical trends.

Higher wage income increased state individual income tax collections in fiscal 2022 but were diminished by the decline in transfer payments in calendar 2022. Individual income tax collections are expected to return to a more normal growth pattern after 2024 reflecting more normal growth rates for wages and transfer payments as well as taxpayer behavior payment patterns returning to historical trends.