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Montana’s Lagging Ways

11-12 Tapping Capitalism V5comp slides

Take a look at the link that’s right above this post. It’s a pdf of three state comparison slides that we’ve been using to demonstrate the real problem Montana has with economic development. What it shows is that, while Montana consistently ranks middle of the road in economic and demographic comparisons nationally, we’re at the bottom of the pack when compared to the states around us.
If we want to fund legitimate government needs we need economic growth and jobs. If we want people to be happy and reach their potential we need to give them the opportunity for earned success. We’re lagging our neighbors in virtually all of these measures because of policies that have been put in place that may have been well-meaning at the time but that remove options and retard growth in the long term. We’re now reaping the ‘rewards’ of those policies through low wages and high unemployment compared to our neighbors.
The problems are many and the solutions are difficult. But they just grow and get more difficult the longer we wait. Here are a few things the legislature and governor should do yesterday to return Montana’s competitiveness and allow our citizens to pursue happiness and reach for their potential:

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  • Labor Reform: Become a right to work state, become an ‘at will’ state, and bring the minimum wage back to federal levels
  • Budget Reform: Reform our state budgeting process so that we spend based on priorities rather than politics
  • Legal Reform: Reform our liability system to decide based on rule of law rather than preferred outcomes of specific cases. This is the biggest single impediment to businesses and job creators coming into the state. If they can’t estimate their future liability risks they’ll move on to someplace where they can
  • Pension and Pay Reform: Most state employees are not overpaid, but too many have migrated into higher pay bands over the past ten years while lower paid workers have been left behind. Our pension system is $10 billion underfunded. Without true reform we won’t be able to keep the promises we’ve made to our public employees.
  • Land Use: The federal government owns about 30% of Montana’s lands and is increasingly trying to regulate the rest. We should decide what happens in Montana and we are capable of regulating responsible development, whether it’s in agriculture, resources, or recreation.
  • Health Care: Obamacare will raise health care costs and decrease access to quality care. We need to implement consumer-driven reforms that allow patients and doctors to make responsible decisions rather than being dictated to from Washington.
  • Education Reform: Our education funding system is a mess and our rules don’t allow parents, teachers, and students to innovate and ensure each student gets the best possible education. We need choices and new thinking, not just more money thrown at the problem.
  • Government Transparency and Accountability: Taxpayers have a right to know how their dollars are being spent and what’s being done in their names. We need the state to post spending, actual spending not just projected budgets, so that each Montanan can be a citizen watchdog and a responsible part of the process. Senator Taylor Brown has a bill to do just that. Take a look at it and tell your legislators and the governor what you think.

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That’s a pretty good start and what MPI will be working on to make Montana competitive again, but mostly to provide each of us the opportunities that free people deserve.

 

The 2013 Legislative Docket

By:

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.