Montana State Budget FY2026 Analysis

Montana spent $16.6 billion across all funds in FY2026, or $14,498 per resident. All-funds spending counts the general fund, federal grants, and dedicated state funds together — the fairest basis for comparing states, since they differ widely in how much they route outside the general fund.

Reserves in the rainy day fund stood at $310 million. Because nearly every state is constitutionally required to balance its operating budget, reserves rather than borrowing are how states absorb revenue shortfalls in a downturn.

Montana's 2025 Legislature passed a $16.6 billion all-funds budget (HB 2) for the FY2026-27 biennium, and Governor Greg Gianforte signed it in late June 2025 after line-item vetoing about $31 million and striking a further $349 million in spending from companion bills. The Legislative Fiscal Division scores the enacted package as a 2.1% increase over the prior biennium — below inflation, as Appropriations Chair Llew Jones emphasized against claims of double-digit growth. Health and human services dominate HB 2 at more than $7.3 billion for the two years, and the session renewed Medicaid expansion, a program worth about $1 billion annually. The defining revenue move is the largest income tax cut in state history, projected at roughly $278 million a year once fully implemented and a cumulative $756 million through 2029, layered onto property tax relief that includes homeowner rebates of up to $400 (about $96.6 million). Education gains over $100 million to raise starting teacher pay under the STARS Act, and lawmakers routed more than $900 million toward a new Growth and Opportunity Trust through 2029. The state projects roughly $311 million in general fund reserves at the end of the biennium. The watch-point is structural: a May 2025 balance sheet showed general fund revenues staying above ongoing expenditures through FY2026 and FY2027 but dipping below them heading into 2028-29 as the tax cuts phase in.