Coming Soon! New MPI Studies

Research Abstracts

The Montana Policy Institute has undertaken an ambitious research agenda over the past two years heading into the 2013 Legislature. Our research is designed to lead the charge in reforming budgeting, spending, education, legal, labor, health care, and energy policy from the perspective of limited government, free enterprise, and individual liberty and responsibility. MPI will feature these studies at its biennial legislative in Helena on November 16-17, 2012.

Budgeting for Results: A Fiscal Roadmap for Montana

By Dr. Barry Poulson and Dr. John Merrifield, MPI Fellows

Release: October 2012

Abstract: The 2012 study serves an update and expansion of our 2010 “Budgeting for Results: A Fiscal Roadmap for Montana.” The updated and expanded study consists of the following. Part I updates the 2010 analysis of the structural deficit that has emerged in the state budget. Part 2 outlines a priority based budgeting approach for the state. Part 3 identifies off-budget spending that is contributing to the structural deficit. Part 4 analyses the extent of the unfunded liability in state and local public pension plans while proposing options for reform. Part 5 provides a deeper look at the continuing accumulation of unfunded liabilities in the Other Post Employment Benefits plan in Montana. Part 6 explains how perpetually increasing costs in Medicaid are crowding out other budget priorities. Part 7 details the distribution of the tax burden in Montana and sets the stage for Part 8, which simulates revenue projections and economic growth with changes in certain tax policies.

 

State Spending Growth and Future Deficits: How Montana Went from Surplus to Shortfall

By Curt Nichols, MPI Fellow

Release: December 2012

Abstract: The upcoming release is an update of the original study released in 2010. Despite occasional surpluses, the looming structural deficits in Montana’s budget are a cumulative and predictable result of years of spending decisions and state budgeting practices. The primary cause is a large increase in ongoing spending enabled by rapid revenue expansion over several biennia followed by a cyclical drop in revenues. Contributing to this problem is a budget process that pays too little attention to efficiency or effectiveness, fences off significant dedicated revenues to earmarked appropriations, and that allows delays in addressing unfunded pension liabilities.

 

The Montana Supreme Court v. the Rule of Law: A Barrier to Prosperity

By Rob Natelson, MPI Fellow

Release: October 2012

Abstract: There is a consensus among researchers that adherence to the rule of law is crucial to vigorous economic growth. Montana’s economy has lagged the economy of most of the United States since the 1980s, and this MPI study explains one reason why: The Montana Supreme Court, the final authority in the state on most legal questions, has not honored the rule of law. Its failure to do so has harmed wealth and job creation in Montana. In this study, Professor Rob Natelson, the Institute’s Senior Fellow in Constitutional Jurisprudence, first examines what it means to honor the rule of law. He identifies five components: clarity, stability, notice, fairness, and restraint. He then shows how the rule of law is important to a state’s economy. The American Founders understood this, and Professor Natelson cites provisions they inserted into the U.S. Constitution to protect the rule of law. He then explains why the Montana Supreme Court is more influential within state boundaries than most tribunals of its kind, giving it a significant impact on the Montana economy. The heart of the study is its comparison of rule-of-law standards with the Court’s actual practices.

Education Funding Reform

By Curt Nichols, MPI Fellow

Release: October 2012

Abstract: Montana’s system of school funding represents a long legacy of elements that have been added over the years with some features dating back to the first half of the previous century. Court action in the late 1980s lead to the most extensive recent reform in school funding with further changes added in 2005 following another court action. The 2005 changes are more of a pasting-on of several additional elements. The present day result is a complex set of entitlements, calculations and regulations. This paper will attempt to describe the process of determining state aid, placing limits on the general fund budget and the district’s process of setting the budget within these limits and finally setting the property tax levy on taxpayers of the district. Some simplification will be required.

 

Montana Pig Tales: Wasted Treasure in the Treasure State

Release: November 2012

Abstract: This book is a follow up to the 2010 Montana Pork Report. It employs the same guidelines used in the 2010 installment to determine if spending is wasteful are whether a program or budget item: 1) Costs Montanans a significant amount more than the national average; 2) Was the result of poor planning; 3) Clearly is meant to benefit specific classes or individuals at the expense of all others; and 4) Does not directly help Montana or does something that is not government’s job to do. Taxpayers, legislators and the governor will draw their own conclusion on whether these programs and projects are essential or wasteful, but even if there is disagreement, at some point a consensus must be reached.

The Limits of Wind Power

By William Korchinski, Reason Foundation; Project Director: Julian Morris, Reason Foundation

Release: October 2012

Abstract: Environmentalists advocate wind power as one of the main alternatives to fossil fuels, claiming that it is both cost effective and low in carbon emissions. This study seeks to evaluate these claims. Existing estimates of the life-cycle emissions from wind turbines range from 5 to 100 metric tons of CO2 equivalent per kilowatt hour of electricity produced. This very wide range is explained by differences in what was included in each analysis, and the proportion of electricity generated by wind. The low CO2 emissions estimates are only possible at low levels of installed wind capacity, and even then they typically ignore the large proportion of associated emissions that come from the need for backup power sources (“spinning reserves”). Wind blows at speeds that vary considerably, leading to wide variations in power output at different times and in different locations. To address this variability, power supply companies must install backup capacity, which kicks in when demand exceeds supply from the wind turbines; failure to do so will adversely affect grid reliability. The need for this backup capacity significantly increases the cost of producing power from wind. Since backup power in most cases comes from fossil fuel generators, this effectively limits the carbon-reducing potential of new wind capacity.

 

How Business Friendly Are Montana’s 25 Largest Cities?

By John Hill, President, American Indicators

Release: September 2012

Abstract: In order to excel in an increasingly competitive global marketplace, Montana must be as attractive as possible to businesses wishing to relocate to or expand in the state. There are numerous state level comparisons of Montana’s business friendliness to inform policymakers in Helena. The same sort of report dedicated to comparing major cities and towns in Montana simply doesn’t exist. Cities and towns are the real engines that drive the statewide economy and Montanans should consider how they compare against each other with respect to economic, social, and educational factors attractive to businesses. MPI and American Indicators have collected data on Montana’s 25 most populous incorporated areas and ranked them based on criteria that both ensure business success and protect the entrepreneurial spirit. The three categories ranked are Economic Vitality, Business Tax Burden, and Community Allure.

 

Montana Public Employees Fare Better Than Private Sector Counterparts

By Glenn Oppel, MPI Policy Director

Release: October 2012

Abstract: A recent analysis for the Montana Policy Institute and other statewide policy organizations, conducted by economists William Even of Miami University and David Macpherson of Trinity University, measured state and local government employees’ pay around the country. It found that the “premium” – the advantage in total compensation for being a public employee rather than a private-sector worker – is eight percent in Montana. The study used regression analysis and controlled for key factors such as educational attainment, sex, age, race, disability, and work experience. Total compensation included wages, paid time off, health insurance, retiree health coverage, other benefits, and pension costs.

 

MPI Issue Brief: Teen Unemployment and the Minimum Wage

By Glenn Oppel, MPI Policy Director

Release: August 2012

Abstract: The Montana Policy Institute released updated research data on the unemployment effects of minimum wage increases on working-age teens in Montana. The unemployment rate for working-age teens has nearly doubled since 2006 and fewer are actually entering the workforce. Controlling for the job-killing effects of the recession, the research estimates that nearly 1,200 jobs were lost for Montana teens because of state minimum wage increases from 2005 to 2011. Unemployment rates for teens are likely to rise in coming years as the recession persists and the state minimum wage increases annually.

 

MPI Issue Brief: Pitfalls of the Patient Protection and Affordable Care Act for Montanans

By Glenn Oppel, MPI Policy Director

Release: June 2012

Abstract: The Patient Protection and Affordable Care Act (ACA) was signed by President Barack Obama on March 23, 2010. If and when it is completely implemented, the ACA stands to radically change the landscape of the health care market by violating basic liberties protected by the U.S. Constitution, undermining any vestiges of consumer-based care, putting more pressure on beleaguered national and state budgets, stymying economic recovery, and exacerbating many of the structural weaknesses that inflate costs and diminish access and affordability in the existing health care market.

 

Economic Impact of Montana’s Renewable Portfolio Standard

By David Tuerck, Paul Bachman, and Michael Head

Release: January 2011

Abstract: In 2005, Montana’s Legislature established a statewide Renewable Portfolio Standard (RPS) mandating that selected renewable energy sources account for 15 percent of retail electric sales by 2015, with a phase-in period beginning in 2010. The negative economic and social impacts of this mandate on Montana will be significant in terms of lost jobs and lower disposable incomes. In addition, the desired environmental impacts will not be achieved as firms with high power usage will simply avoid or leave Montana in favor of areas with lower electricity prices and potentially lower environmental standards, taking their jobs and prosperity with them.

 

Tax Foundation Releases Annual State-Local Tax Burden Ranking Montana Ranks 38th

A new study by the Tax Foundation, using the latest data from 2010, ranks the combined state and local tax burden in the 50 states. It calculates the percentage of income state residents are paying in state and local taxes and whether those taxes are paid to their own state or to others. (The study does not attempt to find the amount of money state and local governments have collected.) As for taxes paid to other states, the study estimates how much a Montanan might pay in taxes while, for example, vacationing in another state.

For the entire U.S., the average tax burden per capita is 9.9 percent. The average taxpayer is paying $3,055 to their home state and $1,056 to other states, for a total of $4,112 in state and local taxes. The average per capita income in the U.S. is $41,146. For the study, a ranking of 1st is the highest tax burden while 50th is the lowest.

For the 2010 tax year, Montana’s relatively low state and local tax burden garnered a ranking of 38th in the nation. Its state and local tax burden is 8.6 percent – 1.3 percentage points lower than the national average and 4.2 percentage points lower than New York’s high of 12.8 percent. The average taxpayer in Montana is paying $2,005 to state and local governments in Montana and $1,084 to other states, for a total of $3,089 out of a per capita income of $35,871. Montanans pay about two-thirds of what counterparts in other states pay in taxes to their home state, but pay a small fraction more in taxes to other states. The study shows that Montana has ranked anywhere from 27th to 43rd since the Tax Foundation started releasing the study in 1977.

Montana competes well with neighboring states in the ranking. Idaho is ranked right in the middle of the pack at 25th with a tax burden of 9.4 percent. North Dakota comes in at 8.9 percent, which places it at 35th. Wyoming and South Dakota are in the top five lowest with ranks of 46th and 49th respectively. Nationwide, Alaskans pay the least at 7 percent.

The line graph below shows the rank of Montana and our four neighboring states from 2000 to 2010. As you can see, Montana has fluctuated in the ranking over the time period from a low of 42nd to a high of 33rd. (For a good overview of Montana’s tax climate, see the Tax Foundation’s 2013 State Business Tax Climate Index.)

Looking at neighboring states, Idaho has made the biggest improvement over the time period, jumping from 8th worst in the nation to 25th. North Dakota has been the most erratic, especially from 2004 to 2010, when it went from a strong ranking of 42nd to a high of 26th. For 2010, North Dakota improved to a solid 35th. South Dakota and Wyoming have been the most consistent performers in our region between 2000 and 2010, vying for spots in the top five and often the top two nationwide.

It is worth pointing out that the study highlights that Wyoming, like this year’s winner Alaska, is able to keep the tax burden on its residents low because of revenue from severance taxes on natural resource development. According to a report by Wyoming’s Legislative Services Office, in 2009 Wyoming ranked 1st in coal production, 2nd in natural gas production, and 8th in oil production among the 50 states. Another contributing factor for Wyoming’s consistently competitive ranking is the tax-shifting nature of its 4 percent sales tax.

Anyone interested in taking a closer look at how business-friendly Montana’s 25 largest cities are, check out MPI’s recent report.

 

 

Prosperity and Sustainability Held Hostage in Montana

Bozeman – Why are the same people who get so exercised about out of state influence on Montana’s elections so uninterested in out of state influence on our livelihoods? Too many people who bemoan outside political spending seem to be just fine with out of state special interests and bureaucrats telling us how we can make a living, manage our lands and raise our families. Who’s watching over our right to pursue happiness and foster a legacy of opportunity for our kids and grandkids while special interests try to fence the state off as a playground for the rich and a petri dish for social and environmental special interests?

A rancher friend once told me he was going to live a pauper and die a millionaire. Much like him, Montana is land rich and cash poor because we’re not allowed to responsibly use our lands and resources for our own benefit. Even as we sit on unimaginable wealth above and below our beautiful landscapes, we have the second lowest wages per job on the nation.[i] We’ve been cut off from our wealth by people who either don’t understand or don’t care about the human toll of pressing their values on Montana families.

We all want and should welcome a sustainable and diverse economy; but industries that aren’t based on some underlying value can pack up and leave overnight. A sustainable economic base must leverage the things that are unique and lasting. In Montana those things are natural resources. You can’t harvest Montana timber in Indonesia, raise Montana wheat in Australia or pump Montana oil in Saudi Arabia. They’re what we have and businesses have to come here to get them. But we’re being increasingly cut off from what makes Montana the Treasure State.

Imagine if the federal government stepped in and outlawed gambling in Las Vegas, tanning in Florida, or Mardi Gras in New Orleans. Those are the local engines of economic growth. Businesses and families depend on those things to prosper and pursue happiness. But here in Montana we’re being cut off from our economic engine. It’s both unfair and unsustainable to have barriers erected by far away special interests and bureaucrats that seem to think that the families and lifestyles of those who live here are expendable.

They can do this because the federal government oversees so much of our land. Nearly 30 percent of Montana is controlled by the federal government.[ii] Getting access to those federal lands, whether through grazing, drilling, digging or harvesting is getting more and more difficult and expensive because of federal meddling in what used to be state responsibilities.

One recent example was a quietly passed Senate appropriations bill that imposes new inspection fees on oil and gas drillers, designates yet more wilderness, i.e. fenced off, lands in Montana and raises grazing fees on public lands. Combine that with new EPA and BLM regulations on fracking – a process that has resulted in exactly zero instance s of contamination in over 60 years[iii] – and you have effectively confiscated Montana’s greatest assets.

That same bill would provide another nearly $400 million dollars to take private land out of production, reducing the tax base that pays for our schools, driving our families off the land, and emptying Main Streets all across Montana.

Do we want to be one of the poorest states in the country forever? Do we want to stand by and watch as our kids leave in search of better lives? Our future as a state is older and poorer if we don’t act now and push back against the special interests that don’t care about the families they’re breaking up and the communities they’re killing off. We can responsibly develop our natural resources. We have the knowledge, the skills, and the technology to maintain a sustainable economic base to fund our schools and take care of those who fall on hard times. Do we have the will?

Welcome to our new website!

Welcome to the new home of montanapolicy.org, your go-to source for Montana free-market ideas and solutions to Montana issues!

Here at MPI, we wanted to bring you a site that was more readily available to meet your needs, whether you are looking for a particular study or press release that MPI has put out, if you simply want to find some general documents on a topic that interests you, or maybe just read our latest blog article, we have made that happen. There are many new features available on this new site, such as: printing, email, and social network sharing and commenting options; a video archive; a new blog format and commenting feature, that will allow us to have more frequent posts that are more readily accessible to you; as well as better organization and search capability, so you that you can find what you want when you want it. We encourage you to check out the site and be sure to email any suggestions or comments you may have about our new site to info@montanapolicy.org.

Happy surfing!

MPI Staff

Immediate Release: Study ranks MT cities on business friendliness

Press Release
9/23/2012
For Immediate Release
Contact:
Glenn Oppel, Policy Director
Montana Policy Institute
406-431-3685
goppel@montanapolicy.org

Summary:
The Montana Policy Institute and American Indicators ranked the business friendliness of 25 cities across Montana based on three categories: 1) economic vitality; 2) tax burden on businesses; and 3) community allure. Factors included in the economic vitality category include recent job growth, residential population growth from 2010 to 2011, population growth from 2000 to 2010, and median per-capita income. Business tax burden focuses on the property tax in each locality. Finally, factors measured in community allure include the cost of living index, per-capita violent crime rates, percent of adults age 25 or older with at least a high school diploma, and average Criterion-Referenced Test (CRT) scores for all high schools in incorporates areas. The overall most business friendly city is Polson, with Glasgow and Sidney very close behind. For the top tier of largest cities, Bozeman took the top spot and fourth overall. The full report is available at www.mtpolicy.org.

FOR IMMEDIATE RELEASE

Montana Cities Ranked On Business Friendliness

Bozeman, MT – The Montana Policy Institute and American Indicators have released a ranking of the economic vitality, business tax burden, and community allure of Montana’s 25 largest cities, providing an index of the measures most sought after by businesses. Polson tops the list, while Anaconda ranks lowest overall.

The report also breaks the cities into five population tiers, with Bozeman heading the largest city rankings and Glasgow leading the smallest group by population.

“Cities and towns are the real engines that drive the statewide economy and we compare how business friendly they are,” according to Glenn Oppel, MPI’s Policy Director. “Businesses that want to start up or relocate in Montana will not only look at the state’s business climate but also stack localities up against each other. Cities that are more welcoming to job creators and their families will obviously have an edge.”

The rankings use several criteria to measure the business climate of each city: tax policy; community allure, including cost of living and crime rate; year-over-year population and job growth; and economic vitality, including average incomes.

“We wanted to make sure that we conducted a comprehensive comparison of cities around the state,” emphasized Oppel. “That’s why we included both large and small, as well as western and eastern, cities in our comparison.”

The western Montana town of Polson takes the prize for the most business-friendly town in the state, with two eastern cities – Glasgow and Sidney – very close behind.

Ranked by size, Bozeman was the most business-friendly city in the top-tier of the largest cities, beating out Billings, Great Falls, Missoula, and Butte in that order. Havre edged out Kalispell, Helena, and Miles City in the second tier. Belgrade topped out the third tier, and Polson and Glasgow topped out the fourth and fifth tiers, respectively.

Oppel pointed out that MPI plans to publish this study on an annual basis to track the business friendly progress of the various cities and see how various policies affect job growth and community well-being.

The full report is available at www.montanapolicy.org.

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340 Words

The Montana Policy Institute is an independent, nonprofit policy research center based in Bozeman. It provides analysis and information to encourage individual freedom, personal responsiblity, and free markets in Montana.

Montana Policy Institute
67 W Kagy Blvd, Ste. B
Bozeman, MT 59715
406-219-0508
info@montanapolicy.org
www.montanapolicy.org

MPI is a Montana tax exempt corporation operated exclusively for the public benefit. No substantial part of the activities of the Institute are used for the carrying on of propaganda or otherwise attempting to influence legislation, promote any political campaign, or on behalf of or in opposition to any candidate for public office.

How Business Friendly Are Montana’s 25 Largest Cities? – 2012 Report

Note: Updated with official full study on November 8, 2012.

By John Hill, PhD, President, American Indicators

In order to excel in an increasingly competitive global marketplace, Montana must be as attractive as possible to businesses wishing to relocate to or expand in the state. There are numerous state level comparisons of Montana’s business friendliness to inform policymakers in Helena. The same sort of report dedicated to comparing major cities and towns in Montana simply doesn’t exist. Cities and towns are the real engines that drive the statewide economy and Montanans should consider how they compare against each other with respect to economic, social, and educational factors attractive to businesses.

The Montana Policy Institute (MPI) and American Indicators have collected data on Montana’s 25 most populous incorporated areas and ranked them based on criteria that both ensure business success and protect the entrepreneurial spirit.

The three categories ranked are:
  • Economic Vitality
  • Business Tax Burden
  • Community Allure

In summary, this report looks at a number of factors:
  • What cities have the best tax policy?
  • Which have more community allure, such as low costs of living and low crime rates?
  • What cities have experienced the most yearover-year population and job growth?
  • What type of economic vitality do cities have, including the average incomes for local residents?

These and other questions are answered in this report.

Click here for the full study (PDF – 3MB)

Laurel Outlook: Business friendliness report says Laurel has room for improvement

A recent report has ranked Laurel in the bottom half of 25 Montana cities for business friendliness.
The Montana Policy Institute (MPI) and American Indicators released a ranking of the economic vitality, business tax burden, and community allure of Montana’s 25 largest cities, providing an index of the measures most sought after by businesses. The overall most business friendly city was Polson, with Glasgow and Sidney very close behind.

Click here to read the rest of the article.

Valley Journal: Polson named most business-friendly city

POLSON — At the Oct. 1 Polson City Commissioner’s meeting, City Manager Todd Crossett announced that the Montana Policy Institute completed a study on the most business-friendly of Montana’s 25 largest cities, and Polson topped the list. The three categories ranked were economic vitality, business tax burden and community allure.

To continue the article, click the link below.
MPI’s business-friendly city rankings in the Valley Journal.

Limits of Wind Power Study (10/2012)

MPI and the Reason Foundation analyze claims about the cost-effectiveness and environmental benefits of wind power.
As Montana’s Renewable Portfolio Standard requires electric utilities to obtain more and more generation from “renewable” sources like wind, policymakers must reevaluate the economic and environmental benefits. Wind blows at speeds that vary considerably, leading to wide variations in power output at different times and in different locations. To address this variability, power supply companies must install backup capacity, which kicks in when demand exceeds supply from the wind turbines; failure to do so will adversely affect grid reliability. The need for this backup capacity significantly increases the cost of producing power from wind. Since backup power in most cases comes from fossil fuel generators, this effectively limits the carbon-reducing potential of new wind capacity. For full study, see below.

For PDF: Limits of Wind Power Study