Montana

State Budget Practice Report Cards and Budget Resource Guide

An improvement in Montana’s rainy day fund policies lifted its grade in reserve funds to an A in 2018 from D in both of the previous two years, although its past deficiencies left it with a three-year average of C for fiscal 2016 through 2018.

In 2017, the state enacted legislation establishing a budget stabilization reserve fund to be tapped in the event of a revenue shortfall. The first deposit of $45.7 million was planned for fiscal 2019. If general fund revenues exceed estimates by at least $15 million in a future fiscal year, half of the excess will be transferred into the rainy day fund on or before August 15 of the following fiscal period. 

Before the law, Montana had attempted to maintain a financial cushion with its year-end budgetary balances. That failed to provide enough cash to smooth out the volatile income stream of a state heavily dependent on oil, natural gas, and mineral revenues. 

The rainy day fund could be particularly helpful in future years, as Montana has limited budgetary forecasting functions— it lacks consensus estimates, as well as multiyear expenditure and revenue forecasts—and averaged a D in the category.

Download Printable State Report Card

To emphasize the need for clear and comprehensible budgets to inform citizens, promote responsible policymaking, and improve fiscal stability, the Volcker Alliance in 2016 began a study of budgetary and financial reporting practices of all fifty states. The Volcker Alliance’s mission is to improve the effectiveness of the administration of government at all levels. Making state budgeting more transparent and accountable is an important part of that goal.

The report cards presented here are taken from the 2018 Volcker Alliance report, Truth and Integrity in State Budgeting: Preventing the Next Fiscal Crisis which proposes a set of best practices for policymakers. For those wishing to gain greater insight into state fiscal issues, the accompanying budget resource guide is derived from the Alliance publication State Budget Sources: An Annotated Guide to State Budgets, Financial Reports, and Fiscal Analyses (2016). 

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