State tax collections for the first four months of this budget year not only lagged those from the same period last year, but also trail what the 2009 Legislature forecast for this year, a legislative report issued Wednesday said.

Terry Johnson of the Legislative Fiscal Division said his previous reports found that revenue collections were trailing expectations for the fiscal year that began July 1 and would have to be "made up" in future months to meet the legislative estimate for the fiscal year that began July 1.

"Collections through October have not improved and are considerably worse than indicated in previous reports," said Johnson, a principal fiscal analyst in his latest monthly report.

He said the total general fund revenue collections through October for fiscal 2010 are $92.8 million less than the same period of fiscal 2009. That's a drop of nearly 22 percent.

When potential revenue shortfalls from individual and corporate income taxes for this year are combined with potentially higher oil and gas production taxes, Montana's total general fund revenues for fiscal 2010 could be anywhere from $51 million to $129 million less than the lawmakers forecast, he said.

Johnson warned that the potential shortfalls could significantly erode the $282.4 million ending fund balance, or surplus, set by the 2009 Legislature for mid-2011.

In response, Gov. Brian Schweitzer said he had no reason to dispute Johnson's latest numbers, but called them "a snapshot of what might be" that will go up and go down over time.

"That's the reason we put the money in the bank is because we were projecting there would be declining revenues," Schweitzer said in a telephone interview. "Fortunately, we have a lot more money in the bank than he forecasts as declining revenues."

The governor had been in New York City this week urging investment rating agencies to upgrade Montana's bond ratings. The better these ratings are, the lower the interest rates that can be charged to refinance Montana's general fund debt. That ultimately could save Montana money.

Schweitzer said he insisted that the 2009 Legislature leave at least $250 million in its ending fund balance as of mid-2011. That surplus or reserve has since ballooned to $326 million, the largest in state history, he said.

What's more, he said Montana also has a "rainy day account" called the coal tax trust fund containing $788 million.

Combining the surplus and coal tax trust fund principal leaves Montana with $1.1 billion in reserve for a general fund budget of $1.8 billion annually, Schweitzer said.

"That is the money we have on our balance sheet that gives us a positive outlook," he said.

However, the coal tax trust fund historically has not been easy for legislators and a governor to tap. Montana's Constitution requires a super-majority vote of three-fourths of the members of both the state House and Senate to take money from the trust fund's principal.

Meanwhile, Johnson said the 2009 Legislature projected that revenue collections would decline by only 1.9 percent, or by $35.1 million, from fiscal 2009 to 2010. What that means, Johnson said, is that future tax collections in the remaining eight months of this year must improve by a net of $57.7 million to meet the 2009 Legislature's estimate.

Because of fast-falling revenue collections starting late last fall, the Legislature ultimately reached this estimate after adopting Johnson's recommendations to chop $292.6 million from the original estimates made a year ago for fiscal 2009, 2010 and 2011.

Although projected individual and corporate income taxes are below estimates, one bright spot is oil and gas production tax collections, Johnson said. He estimated they could exceed the estimates by $14 million for the year, although their taxes weren't due yet.

The 2009 Legislature estimated total state general fund revenue collections for the 2010 fiscal year that began July 1 would be $1.773 billion, down from $1.808 billion in fiscal 2009, which ended June 30.