Gov. Brian Schweitzer continues to have an optimistic outlook for state revenues and is clearly positioning himself for an upcoming budget tangle with the Republican-controlled Legislature.

“I think we are going to be fine,” Schweitzer told the Inter Lake editorial board this week, defending budget priorities that include increases in K-12 and higher education.

Schweitzer, a Democrat, has for months been at odds with the Legislative Fiscal Division’s state revenue forecasts. His budget office is projecting a 6.4 increase in revenue during the 2011 fiscal year while the fiscal division is projecting a 2.7 percent increase.

Schweitzer stresses that halfway into the fiscal year, actual state revenues are up 12.3 percent.

“We have a higher revenue estimate than they do,” Schweitzer said. “We’re right and they are wrong.”

The governor bases his optimism largely on the state having record wheat and hay crops last year, booming mineral prices, high oil prices and expanded production, record years for visitation at Glacier and Yellowstone national parks, and the state having a $348 million cash reserve.

Since early in the legislative session, Republican lawmakers have taken a conservative view of expected revenues and have resisted measures in Schweitzer’s proposed budget, such as $71 million in transfers from special funds to the state’s general fund.

Schweitzer refutes those positions. “It’s starting to look silly around there,” he said, referring to the gloomy revenue predictions. “We’re halfway through the [fiscal] year, and we’re blowing the top off the estimates.”

One-time transfers from special funds is not a new practice. When Republicans controlled the Legislature from 2001 through 2003, Schweitzer noted, there were a total of $332 million in transfers to balance the budget.

While Montana’s overall economy has been emerging from the economic recession, he concedes that it may not seem that way to residents in Northwest Montana, an area with unemployment rates exceeding 12 percent.

But he predicts the recovery will eventually catch up here.

“As soon as things start moving elsewhere, things will pick up here,” he said.

Schweitzer is intent on continuing to provide increased funding in K-12 and higher education, saying they both play a critical role in the state’s economic growth potential.

Since 2007, higher education spending has increased from just over $250 million to nearly $350 million, and Schweitzer proposes that it be boosted to nearly $400 million by 2013. Schweitzer said the spending increases have been important because they have allowed the state to avoid tuition increases, which he regards as tax hikes.

In K-12 education, state spending per student has gone from $3,750 in 2006 to $4,500 in 2011, and Schweitzer is proposing it be increased an additional 1.7 percent over the next biennium.

Schweitzer said the overall increases in education spending account for the bulk total state spending increases since 2005.

“I won’t apologize for that,” he said.

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