Carl Graham, CEO, Montana Policy Institute
With the 2013 legislative session about to begin I thought it might be useful to highlight some of the important issues we could see coming out of Helena over the next few months. Montana is fairly unique in that we still enjoy a true citizen legislature and, regardless of what we may think of some them individually or even in their various groupings, our legislators represent one of the last bastions of true public service, giving much more than they get out of the of process. We should thank them for that, even the ones with whom we disagree.
So, what are they going to be talking about? Well, much of what you’re going to hear in the media between now and next April will be spectacular examples of superfluous issues because that’s what makes news. The hard work and hard issues will be left to the back pages because, well, they’re hard. They’re hard to explain, hard to understand, and hard to get people excited about. But some of these issues will drive future Montanans’ ability to live, work and play here, and they deserve more than passing references on opinion pages or superficial treatment under spectacular headlines.
So let’s look at a few of them.
State Employee Pay: Montana’s public employees are not overpaid. In fact too many of them are underpaid. But they do enjoy benefit packages and job security that our private sector workers can only dream of. This simply isn’t sustainable. At some point private sector workers will see their state employee neighbors’ immunity from the business cycle as grossly unfair, especially when they’re making sacrifices to foot the bill. This is a tinder box that will only burn hotter the longer we add fuel without significant reform, especially in the area of pensions.
Public Pensions: Montana’s pension systems are underfunded to the tune of nearly $4 billion by the state’s accounting, and by closer to $10 billion using real-world accounting standards that wouldn’t land a private sector employer in jail. The state understates this liability by assuming, for example, a 7.75% return on investment while actual returns over the latest ten year period were under 5%. Everyone’s goal is, or should be, to preserve the promises we’ve made to our pensioners. But that outcome becomes less and less likely the longer we wait to reform the system in ways that make it both sustainable and fair to Montanan’s taxpayers.
Labor Reform: It’s not likely we’ll see much in this area because a GOP-led legislature and union-backed governor aren’t likely to find common ground. But if we care about growing jobs, it would be irresponsible to not demand a debate about our labor environment in at least two areas: right to work and minimum wage. Some simple facts form the parameters. First, we are surrounded by right to work states, and they are all outperforming us economically and demographically. Second, right to work states on average have lower unemployment rates, but also lower wages than states that compel union membership and/or dues. With those simple facts as givens, the remaining arguments mostly revolve around cause and effect and “fairness” issues that are inherently political. So our political leaders should be arguing them. Next, Montana’s minimum wage is significantly higher than the federal level even though our per capita income is among the lowest in the nation. It also increases automatically even with high unemployment rates. Labor is like any other good in that if you raise its price people will buy less of it. We should have a debate over whether we would rather force people, especially the young and poorly educated, onto the public dole or allow them the dignity of earning a living through the increased job opportunities that would be available at even the federal minimum wage level.
Natural Resource Development: Economic development in Montana means responsible natural resource development. It’s what we have, and it’s sustainable because it’s unique to the state. If you want Montana oil or coal or gold or wheat or recreation, you have to pay Montanans to get them. That’s not true of portable industries that can easily relocate. So while we should welcome all industries, we should also be lowering barriers, especially those that come from Washington D.C., that restrict the responsible development of what we have here in abundance.
Education Reform: Montana’s schools are good but have seen static performance at higher per pupil costs for two decades. We’re good at teaching our kids on average, but nobody’s average. Each kid deserves to be taught in a way that maximizes his or her potential, and our current one-size-fits all system simply doesn’t allow us to optimize educational outcomes for each of our kids. We need to catch up to the true education innovators around the country by providing more delivery options that address the needs and aspirations of each student, and not just accept that they do Okay on average.
What Should Government Do vs. What Can Government Do? Finally, in times of abundance it’s easy to say government should do something because government can do something. Political philosophy aside, that simply doesn’t work when taxpayers are struggling to make ends meet and can’t afford an ever expanding state. Just because government can do something doesn’t mean that it should. Whether for fiscal or philosophical or moral reasons, we as citizens will be forced to take more responsibility for our actions, for our livelihoods, and for our happiness as the math catches up and current spending levels become unsustainable. The sooner our public servants in Helena acknowledge that fact and begin to grapple with its implications the easier their decisions will be, and the better our lives will be.