Heading into the Labor Day weekend, Montana Gov. Brian Schweitzer expressed concern about the state's unemployment rate but confidence in the state government's fiscal position.

"Montana is one of two states not in deficits," Schweitzer said in an interview Friday. "Our cash in the bank is about $400 million, the largest cash reserve position in the state's history."

But 48 other states are struggling, some severely, according to a report released this week from the Center on Budget and Policy Priorities.

"The unprecedented state fiscal problems brought on by the worst decline in tax receipts in decades show no signs of letting up," the report states.

Even in states that have adopted balanced budgets for the coming year, "these budgets are already falling out of balance as the economy has caused state revenues to decline even more than projected. States will continue to struggle to find the revenue needed to support critical public services for a number of years."

Schweitzer said Montana's tax receipts in August were down about $48 million compared to the same month a year ago, but he believes that about $20 million of that may be accounted for by a computer that showed almost no collections on alcohol sales and vehicle licensing for the month, an obvious accounting mistake that needs to be corrected.

But still, Schweitzer acknowledged that tax revenues are down.

"Tax revenues are off some. We are in a recession," he said, adding that he is confident the cash reserve will help offset shortfalls in tax revenues.

"We are in a position where we have more cash in the bank than anytime in history," he said. "We'll weather the storm."

Schweitzer said the statewide employment rate is 6.7 percent, but it's substantially higher across six Northwest Montana counties.

He said that's largely because of contractions in the timber and construction industries, along with layoffs at major employers such as the Columbia Falls Aluminum Co. and Semitool.

Meanwhile, employment is growing in the energy sector because of wind farm, transmission line and pipeline projects, along with a new railroad and coal mine in Eastern Montana.

"If the six [northwest] counties weren't in the picture, we'd have unemployment around mid-5 percent," Schweitzer said.

Schweitzer noted that belt tightening has helped the fiscal outlook for state government.

He said state government employment spending is down 9 percent compared to last year, partly because of a two-year salary freeze and vacancy savings on state jobs.

"Someone retires and you don't replace them," he said.

The state's cash reserves will be important in months to come, he said.

"The way you prepare for these downturns is to have money in the bank. Every small business owner knows that," Schweitzer said. "When 48 states decided to zig, we decided to zag."

Reporter Jim Mann may be reached at 758-4407 or by e-mail at jmann@dailyinterlake.com