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Media Trackers Montana: 50 State Legislators Discuss Free Markets at Montana Policy Institute Forum

A total of 50 state legislators and approximately 130 people met this weekend to discuss free market principles for Montana.

The two-day event was hosted by the Montana Policy Institute (MPI) and focused on gearing up both state legislators and the general public for the upcoming 2013 legislature. The forum featured discussions and presentations on important issues for the upcoming legislature and was highlighted with a presentation by Wall Street Journal Editorial Board Member and Senior Economics Writer Stephen Moore.

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The Montana Supreme Court Versus the Rule of Law

By Robert G. Natelson, Senior Fellow in Constitutional Jurisprudence, Montana Policy Institute

Click here for full study. (PDF – 3.77MB)

Executive Summary

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. The comparison is based partly on previous scholarly research and partly on a new case-by-case analysis of some of the court’s most important opinions. Professor Natelson concludes that the court frequently diverges from rule of law standards, and that this conduct presents a serious barrier to prosperity in Montana.

 

Montana’s Education Funding: A Fiscal Roadmap for Montana (2012)

By Curt Nichols, MPI Fellow

Click here for full study. (PDF – 3.4MB)

Executive Summary

Montana’s school funding and administration system is complex, and disappointing student outcomes indicate room for improvement. Those who wish to improve the system will need a basic understanding of these systems or their arguments and ideas will fall on deaf ears. Yet few people do understand these systems, the incentives they create or the forces that have led to their complexity.

Schools are financed by a mixture of state, federal, and local funds. District budgets are regulated by state statute with restrictions on local control to meet state constitutional mandates as interpreted by the courts. Governance is shared by the elected local board of trustees, the governor-appointed state board of public education, the legislature, and the elected superintendent of public instruction.

Montana’s constitution guarantees equity and adequacy in our education system. School district have successfully challenged the state’s funding system based on both these guarantees in separate actions over the past two decades. In response to the Montana Supreme Court’s equity ruling, variations between districts’ budgets have been limited, state funding has been increased, state subsidies have been targeted at districts with smaller relative property tax bases, and district budgeting practices have been revised. The adequacy ruling has resulted in new entitlements and increases in state funding. The overall effect has been an increase in school spending and a reduction in district-to-district spending variation.

Districts have varying expenses and resources that are based on differences in demographics and economic bases. Districts enroll varying proportions of low income and handicapped students. These students require additional resources. Districts also vary widely in their tax and non-tax revenue bases. These widely varying revenue bases lead to large differences in property tax rates between districts spending at only modestly different levels and keep spending near statutory minimum levels in some districts.

Montana students perform well when compared to other states. However, this good performance is partly due to demographic attributes characteristic to Montana, including fewer low income, minority, and English language learners that place fewer burdens on our schools than in more populous states. The large numbers of small, rural districts, which perform well with these groups, aid the state’s overall performance record. In spite of Montana’s solid performance record, it is important to consider the relative weakness of the United States education system in international comparisons as well as the failure of our schools to meet our own expectations. Many Montana students are inadequately prepared for post-secondary education. In particular, high percentages of low income and Indian students graduate without proficiency in mathematics and science.

The impact of equity and adequacy lawsuits has been primarily to increase funding for districts. The district judge in the adequacy case specifically excluded considering student performance as an indicator of funding adequacy despite the fact that national studies demonstrate that the link between funding levels and student performance is weak. Performance incentive programs in other states and advocated by the some federal education programs are based on a belief that incentives matter and can be used to improve schools and student outcomes. Montana does not have voucher or charter school programs and only minimal performance incentive funding. Despite support in numerous other states, the rejection of these programs is partially attributable to comfort with Montana’s relatively good current student performance on standardized tests. Interestingly, other states that have adopted performance-focused programs have learned that incentives matter and actually boost student outcomes.

This paper endeavors to help parents and policymakers better understand a complex education funding system in order to more effectively evaluate education policy in the future. Our hope is that Montana’s primary and secondary education system is not only the best in the nation in terms of academic performance but also the most efficiently managed and administered in terms of dollars and cents. Our children and taxpayers deserve no less.

Media Trackers Montana: New Study Says State Employees Receive 15% More in Total Compensation than Private Sector Workers

A new study released by the Montana Policy Institute (MPI) shows that employees of the state of Montana receive 15 percent more in total compensation than employees in the state’s private sector.

Unlike Montana’s State Human Resources Division’s biennial salary survey, the MPI study on public and private wages in the state includes fringe benefits and compares total compensation to private sector equivalents.

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Budgeting For Results: A Fiscal Roadmap for Montana (2012)

By Barry W. Poulson, PhD, MPI Senior Fellow, and John Merrifield, PhD

Click here for full study. (PDF- 4MB)

MPI Policy Note: Budgeting For ResultsA Fiscal Roadmap For Montana

Based on an MPI Study by Barry Poulson, Ph. D. and John Merrifield, Ph.D.

 BOTTOM LINE UP FRONT:

Montana has experienced unconstrained state government spending growth, resulting in a structural deficit in which future revenues will not match future spending obligations. Making matters worse is a flawed budgeting process where spending increases are “baselined” into each biennial budget regardless of affordability or necessity. When you combine the “baseline” budgeting approach to the structural deficit, recent surpluses simply are not big enough to keep Montana in the black long term. If Montana is to keep its fiscal house in order for our generation and those to come, lawmakers must look closely at these challenges in the 2013 Legislature. MPI proposes that Montana convert to a priority-based budgeting system that will empower legislators with much greater spending oversight and accountability to taxpayers.

There is a structural deficit in the state budget.

  • A state is said to have a structural deficit if under current law state revenues are projected to fall below state expenditures in the long run. Structural deficits, unlike current account deficits, are not linked to the business cycle but rather to the fiscal rules that determine expenditure growth in the long run. These rules often encourage deferring difficult choices to future lawmakers.
  • Short term surpluses, like the one forecasted for the upcoming 2015 Biennium, tend to mask the significance of long term structural deficits because lawmakers and the public perceive that the state’s fiscal outlook is rosy. Although Montana is sitting on one of the largest surpluses in the last decade, it is a drop in the bucket compared to revenues needed for future spending obligations.
  • Medicaid, unfunded liabilities in public employee and teacher pension programs, annualization of one-time federal money, and off-budget expenditures represent the bulk of Montana’s structural deficit.
  • Temporary federal injections have allowed state Medicaid spending to grow at a reasonable rate or even decline. However, Medicaid spending could increase $70 million by the end of the decade depending how the Affordable Care Act is implemented in Montana.
  • Unfunded or underfunded pension liabilities for state workers are over $3 billion and very likely worse given unrealistically high assumptions for returns on pension fund investment portfolios.
  • Various off-budget expenditures account for nearly a quarter of the state’s overall spending but are not prioritized with other state budgetary goals and obligations. This “earmarked” spending is automatic and generally immune from the rigors of the normal budgeting process.
  • The structural deficit is unsustainable and requires a change in the fiscal rules of the game and no windfall of surplus revenue will rectify the long term balance sheet.

Montana’s budget process is seriously flawed, resulting in a bias towards spending growth.

  • Montana’s “present law” system begins with existing agency budgets, adjusts them for inflation and other factors, and uses the outcome as a baseline for future budgets. Spending increases are automatically carried into future years regardless of revenues and priorities. The only way Montana has been able to keep up with present obligations is with minor cuts and the “luck” of unanticipated surpluses.
  • The system implicitly assumes that all current spending is both efficient and effective, and that the justifications behind all existing state programs and expenditures remain valid. Actual performance and need are not systematically measured.
  • The result is a baseline budget that will almost always be larger than its predecessor. Any reduction to this budget is treated as a cut, even though it may still increase spending levels from previous years.
  • The burden is on our citizen legislators to find, propose, and defend cuts to the proposed budget, something they are ill-equipped to do during a biennial 90-day session as special interests and government officials lobby for their programs. Moreover, there is an automatic political liability for any lawmaker that tries to restrain spending.

MPI recommends the state convert to a priority-based budget system.

  • Priority-based budgeting has been implemented successfully in a number of states. It is not experimental and the benefits are real and measurable.
  • The process begins by asking four basic questions: 1) What are the essential services the state must perform? 2) How can the state deliver essential services efficiently and effectively? 3) How should the state budget be allocated for the delivery of essential services? 4) How can the state assure that essential services are delivered efficiently and effectively in the long run?
  • Programs, rather than agencies, are evaluated based on their effectiveness and efficiency in addressing these four questions. Since each program is evaluated against objective criteria and against other programs with similar goals, results will be measurable and redundancy will be minimized.
  • This process forces lawmakers to acknowledge the fact that resources are limited, and then prioritize spending to achieve the greatest impact for the least amount of spending during each budget cycle. It also requires lawmakers to be accountable to those paying the bill – i.e. taxpayers – and not special interest groups and agency bureaucrats.

Other reforms are also necessary to resolve Montana’s structural deficit.

  • Off-budget or statutory spending makes up nearly 25 percent of state expenditures. This spending is automatic and outside the purview of normal budget processes. These “earmarks,” which stood at about $2.2 billion for the 2013 Biennium, should be forced to compete with other programs for taxpayer dollars.
  • Unfunded federal health care mandates greatly increase Montana’s Medicaid and pension liabilities. Federal subsidies will end at about the time costs will begin to significantly increase, resulting in unsustainable state obligations. Implementation of the Affordable Care Act could increase the cost of the program by nearly $100 million by the end of the decade.
  • Underfunded state pension programs will increasingly draw on budget resources and siphon funding from essential programs. Montana’s defined benefit system should be stabilized and then converted to a defined contribution system for new hires.

Dynamic tax scoring demonstrates that Montana can change its tax policy to boost growth.

  • This study uses dynamic scoring to analyze the impact of new fiscal rules and fiscal policies on budget stabilization and economic growth in Montana, which include tax and expenditure limits, a budget stabilization fund, an emergency fund, and capital investment fund.
  • The tax and expenditure limit caps the growth in general fund spending at the rate of population growth plus inflation. Surplus revenue above that cap is allocated to the budget stabilization fund, emergency fund, and capital investment fund. When the cap is reached on those funds additional surplus revenue is offset by tax cuts or tax rebates.
  • The study then simulates the impact of the new fiscal rules and fiscal policies on economic growth. The simulation revises personal income and future tax revenues when dollars shift between the public and private sectors, or when tax rates drop, and when idle fund balances accrue interest payments.
  • In the baseline simulation, the new fiscal rules allow for a 3.5 percentage point reduction in personal income tax rates. That reduction in personal income tax rates significantly increases the rate of economic growth. Higher growth in personal income generates additional tax revenue, offsetting some of the static revenue effects of the rate cuts.
  • Lastly, the study simulates a revenue neutral replacement of the income tax with a sales tax. This revenue neutral sales tax rate for Montana is estimated at 5.3 percent, close to the national average. This tax reform boosts economic growth even more than the income tax rate cuts simulated in this study.

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The Montana Policy Institute is a 501(c)(3) policy research organization that equips Montana citizens and decision makers to better evaluate state public policy options from the perspective that policies based upon limited government, individual rights and individual responsibility, and free markets will result in the greatest common good. To find out more or for copies of the complete study, visit us at www.montanapolicy.org. NOTHING WRITTEN here is to be construed as an attempt to influence any election or legislative action. PERMISSION TO REPRINT this paper in whole or in part is hereby granted provided full credit is given to the author(s) and the Montana Policy Institute.

 

Copyright © 2012

 

The Montana Policy Institute, 67 West Kagy Blvd., STE. B, Bozeman, MT 59715; 406-219-0508; www.montanapolicy.org

 

Public vs. Private Sector Compensation in Montana (2012)

By Glenn Oppel, MPI Policy Director

Click here for full study. (PDF – 4MB)

The State Human Resources Division (Division) of the Montana Department of Administration plays a key role in the adoption of a pay plan for state employees in Montana. It is for all intents and purposes the sole source of data on compensation used by policymakers and agency managers. Unfortunately, the data the Division produces is based on a flawed methodology and limited data.

The Division conducts a salary survey of Montana and surrounding states on a biennial basis to arrive at a private sector comparison for occupations and offices in state government. With the most recent survey, the Division determined that on average a majority of the public sector occupations studied have earnings that are 13.3 percent below what they call the “market midpoint.” The Division’s methodology is open to criticism on a number of points:

• Many positions in the public sector have no private-sector equivalent. Correctional officers and fire fighters, for instance, have no direct private sector equivalent. Comparing occupations like these to a “market midpoint” yields very little useful information.

• Comparing earnings among occupations does not account for the differences in age, education, and experience for the employees who work in these occupations.

• The Division’s analysis doesn’t include the value of employee benefits — health insurance, paid leave, pension, etc. — which make up a considerable portion of public employee compensation.

This new analysis from the Montana Policy Institute compares employees of similar personal and professional characteristics in both the public and private sectors of Montana. Instead of comparing pay in broad occupational categories, this report uses regression analysis to compare public and private employees of similar work experience, education, gender, race, and disability status. It also analyzes total compensation (which the state fails to do), including take-home pay as well as fringe benefits.

This report details the methodology and finds that public employees in Montana actually earn over 15 percent more than comparable employees in the state’s private sector.

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.

 

 

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.