articles Ratings /ratings/en/research/articles/210914-state-brief-montana-12109519 content esgSubNav
In This List
COMMENTS

State Brief: Montana

COMMENTS

U.S. Local Governments Credit Brief: Minnesota Cities, Counties, And Schools

COMMENTS

U.S. Public Finance Rating Activity, September 2021

COMMENTS

How The Western States Plan Is Critical To Ratings As Colorado River Flows Slow To A Trickle

COMMENTS

U.S. Local Governments Credit Brief: California Counties And Municipalities


State Brief: Montana

Rating History
Date Action Rating Outlook
Sept. 11, 2020 Affirmation AA Stable
May 5, 2008 Rating upgrade AA Stable
June 28, 2007 Outlook change AA- Positive
Feb. 15, 1994 Outlook change AA- Stable
Aug. 26, 1992 Outlook assigned AA- Negative
Oct. 22, 1986 Rating downgrade AA-

The effects of the COVID-19 pandemic have been less acute on Montana's economy and budget relative to other states. At the same time, the state's strong reserves, very low debt, and history of active budget management practices along with the governor's ability to make midyear budget cuts when needed will aid the state in addressing lingering economic headwinds or slower-than-forecast revenue growth heading into the fiscal 2022-2023 biennium.

Montana outperformed revised fiscal 2020 revenue estimates with only a 1.6% decline in general fund revenue, and ended with a strong $452.5 million in general fund reserves and $118.0 million in the budget stabilization reserve fund, equaling 24% of annual expenditures, and estimates higher unassigned balances totaling $720 million at June 30, 2021, based on unaudited results. Montana reported a $164.4 million surplus, on a budgetary basis, at fiscal year-end June 30, 2020, and a larger operating surplus in fiscal 2021 primarily as a result of better-than-anticipated revenue collections.

The state received $1.25 billion from the CARES Act and $906 million from the American Rescue Plan Act.

We consider Montana's environmental and social risks higher than those of other states. However, we view the state's governance risks as in line with the sector. Environmental risks stem from the state's concentration in the coal, oil, and gas industry and the potential for increasing economic challenges as utilities transition to renewable energy sources. The state's susceptibility to wildfires, which have led to budget pressures in the recent past, also contributes to its environmental risks. We view Montana's social risks as slightly higher than those of other states given an age dependency ratio that is substantially above the national average.

Biennium 2022-2023 Budget Highlights

  • The general fund balance is budgeted to improve to $379.6 million in 2023 from $277.0 million in fiscal 2021as a result of higher revenue estimates, lower spending on Medicaid, and other budgeted savings, which are estimated to equal 14.0% of expenditures in 2023, or 18.7% with inclusion of the $121 million budget stabilization reserve fund funded at its maximum.
  • With the federal aid and vaccine progress, general revenue is expected to rebound to $2.75 billion in 2023, resulting in a $53.8 million surplus, following projected revenue growth of 1.4%, 3.0%, and 4% in fiscal years 2021 through 2023, sequentially.

What We're Watching

  • While we expect Montana to sustain steady budgetary performance into the fiscal 2022-2023 biennium, any conditions that cause structural imbalanced budgets to form and prompt the state to substantially deplete reserves--as a result of dampened revenue growth, a more severe drop-off in federal relief funding, or otherwise--without a plan for replenishment could challenge our view of credit quality.
  • Montana's continued economic dependence on cyclical sectors, including natural resources, agriculture, and tourism, along with the oil and natural gas sectors, which are particularly sensitive to commodity prices.

Credit Fundamentals

  • Improved reserves that provide flexibility to withstand temporary revenue shortfalls
  • Government framework that requires Montana to adopt a balanced budget and provides the governor some flexibility to reduce spending across agencies within the biennium to maintain structurally stable fiscal results
  • Low debt burden, at $130 per capita and 0.2% of personal income, coupled with rapid debt amortization, which keeps fixed costs manageable.

Historical Financial Data
Mil. $ unless otherwise noted
Audited GAAP basis 2020 2019 2018
General fund revenue 2,443 2,450 2,265
General fund expenditures 2,305 2,274 2,220
Net transfers and other adjustments 10 64 83
Net general fund operating surplus (deficit) 148 241 128
Total general fund balance 593 443 199
Budget reserve* 570.5 358 187
% of general fund budget expenditures 24.1 14.8 8.2
*Budget stabilization reserve fund established in 2019 biennium.

This report does not constitute a rating action.

Primary Credit Analyst:Sussan S Corson, New York + 1 (212) 438 2014;
sussan.corson@spglobal.com
Secondary Contacts:Ladunni M Okolo, Dallas + 1 (212) 438 1208;
ladunni.okolo@spglobal.com
Kayla Smith, Centennial + 1 (303) 721 4450;
kayla.smith@spglobal.com

No content (including ratings, credit-related analyses and data, valuations, model, software or other application or output therefrom) or any part thereof (Content) may be modified, reverse engineered, reproduced or distributed in any form by any means, or stored in a database or retrieval system, without the prior written permission of Standard & Poor’s Financial Services LLC or its affiliates (collectively, S&P). The Content shall not be used for any unlawful or unauthorized purposes. S&P and any third-party providers, as well as their directors, officers, shareholders, employees or agents (collectively S&P Parties) do not guarantee the accuracy, completeness, timeliness or availability of the Content. S&P Parties are not responsible for any errors or omissions (negligent or otherwise), regardless of the cause, for the results obtained from the use of the Content, or for the security or maintenance of any data input by the user. The Content is provided on an “as is” basis. S&P PARTIES DISCLAIM ANY AND ALL EXPRESS OR IMPLIED WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE, FREEDOM FROM BUGS, SOFTWARE ERRORS OR DEFECTS, THAT THE CONTENT’S FUNCTIONING WILL BE UNINTERRUPTED OR THAT THE CONTENT WILL OPERATE WITH ANY SOFTWARE OR HARDWARE CONFIGURATION. In no event shall S&P Parties be liable to any party for any direct, indirect, incidental, exemplary, compensatory, punitive, special or consequential damages, costs, expenses, legal fees, or losses (including, without limitation, lost income or lost profits and opportunity costs or losses caused by negligence) in connection with any use of the Content even if advised of the possibility of such damages.

Credit-related and other analyses, including ratings, and statements in the Content are statements of opinion as of the date they are expressed and not statements of fact. S&P’s opinions, analyses and rating acknowledgment decisions (described below) are not recommendations to purchase, hold, or sell any securities or to make any investment decisions, and do not address the suitability of any security. S&P assumes no obligation to update the Content following publication in any form or format. The Content should not be relied on and is not a substitute for the skill, judgment and experience of the user, its management, employees, advisors and/or clients when making investment and other business decisions. S&P does not act as a fiduciary or an investment advisor except where registered as such. While S&P has obtained information from sources it believes to be reliable, S&P does not perform an audit and undertakes no duty of due diligence or independent verification of any information it receives. Rating-related publications may be published for a variety of reasons that are not necessarily dependent on action by rating committees, including, but not limited to, the publication of a periodic update on a credit rating and related analyses.

To the extent that regulatory authorities allow a rating agency to acknowledge in one jurisdiction a rating issued in another jurisdiction for certain regulatory purposes, S&P reserves the right to assign, withdraw or suspend such acknowledgment at any time and in its sole discretion. S&P Parties disclaim any duty whatsoever arising out of the assignment, withdrawal or suspension of an acknowledgment as well as any liability for any damage alleged to have been suffered on account thereof.

S&P keeps certain activities of its business units separate from each other in order to preserve the independence and objectivity of their respective activities. As a result, certain business units of S&P may have information that is not available to other S&P business units. S&P has established policies and procedures to maintain the confidentiality of certain non-public information received in connection with each analytical process.

S&P may receive compensation for its ratings and certain analyses, normally from issuers or underwriters of securities or from obligors. S&P reserves the right to disseminate its opinions and analyses. S&P's public ratings and analyses are made available on its Web sites, www.standardandpoors.com (free of charge), and www.ratingsdirect.com and www.globalcreditportal.com (subscription), and may be distributed through other means, including via S&P publications and third-party redistributors. Additional information about our ratings fees is available at www.standardandpoors.com/usratingsfees.

Any Passwords/user IDs issued by S&P to users are single user-dedicated and may ONLY be used by the individual to whom they have been assigned. No sharing of passwords/user IDs and no simultaneous access via the same password/user ID is permitted. To reprint, translate, or use the data or information other than as provided herein, contact S&P Global Ratings, Client Services, 55 Water Street, New York, NY 10041; (1) 212-438-7280 or by e-mail to: research_request@spglobal.com.


Register with S&P Global Ratings

Register now to access exclusive content, events, tools, and more.

Go Back