Montana Department of Revenue Announces Entitlement Share Growth Factor

By Dylan Cole, Montana Department of Revenue Economist

The Montana Department of Revenue has calculated the entitlement share growth factor for Fiscal Year 2021. For cities, counties, and consolidated governments, the growth factor for the entitlement share will be the maximum factor allowed by law.

The entitlement share growth factor is based on the ratios generated using two-state revenue factors for the three most recently completed fiscal years. The first ratio is generated using the combined revenue estimates for the vehicle taxes and fees, gaming revenue, and alcohol taxes referenced in MCA, 15-1-121(2). The second ratio is created using the combined statewide revenue estimates for individual income taxes and corporation income taxes.

Both ratios are generated by dividing these estimates for the most recent and second-most recent completed fiscal years by the sum of the revenue for the second- and third-most recent completed fiscal years.

Finally, the two ratios are weighted and summed together, with the first ratio receiving a 0.75 weight and the second ratio receiving a 0.25 weight.

Fiscal Year Alcohol/Gaming/
Vehicles
Personal and Corp.
Income
FY 2017 $233,311,146 $1,294,216,278
FY 2018 $243,924,587 $1,464,876,402
FY 2019 $249,149,117 $1,615,546,031
Non-Weighted Ratio 1.0332 1.1165
Weighted Ratio 0.7749 0.2791
Growth Factor 1.0540

The calculation yields a growth factor of 1.0540, which exceeds the maximum growth laid out in 15-1-121 (4)(b)(ii) of 1.03 for counties, 1.0325 for consolidated governments and 1.035 for cities. Therefore, the growth factor for the entitlement share is the maximum allowable growth.

Since FY2018, entitlement share reimbursements for Class 8 property tax base reductions have been tied to the maximum mill calculation set out in 15-10-420 (1)(a) MCA. This calculation is half the average rate of inflation of the previous three years. The most recently available calculation is 1.02%, which means the entitlement share payments for Class 8 reimbursements has grown by a factor of 1.0102 for FY2021.

The Department of Revenue is required to calculate the growth factor for the entitlement share payment per 15-1-121 (4)(b) MCA.

Tables for FY2021 payments to local governments can be found on the Department of Revenue website.

Any questions  can be directed to [email protected] or  by calling Dylan at (406) 444-6634.