Dubbed Montana’s premier business event, the Montana Chamber of Commerce Business Days at the Capitol went off without a hitch yesterday at the Great Northern Hotel in Helena.
Last year, the Montana Chamber launched Envision 2026 – a plan for Montana’s future. The plan to bolster Montana’s business climate includes five core objectives; workforce development, improving Montana’s business climate; infrastructure development; entrepreneurial development; and communication/investor relations. Each of these objectives helped to frame this year’s agenda of Business Days at the Capitol.
Legislative leadership from the House and Senate opened the day of presentations at the ever-popular Eggs and Issues breakfast. Speaker, Austin Knudsen (R-Culbertson); Minority Leader, Jenny Eck (D-Helena); Senate President, Scott Sales (R-Bozeman); and Senate Minority Leader, Jon Sesso (D-Butte) appeared committed to a bipartisan effort to bring about necessary infrastructure funding. The legislature will grapple with a much tighter budget this go-around, presenting the issue of partial bonding as the likely means to an end which both parties realize is long overdue.
If you build it, they will come
Infrastructure efforts over the last four years have failed - either lacking the necessary votes to make it to Governor Bullock’s desk, or meeting a death by veto. Bonding had been a point of contention during past, more prosperous legislative sessions when a majority of Republicans preferred using cash to fund critical infrastructure projects, especially in eastern Montana. Now, though, due in part to lower commodity prices, legislators will not have the luxury of such an option.
“How did we get here,” asked Speaker Knudsen, referring to State’s grim fiscal situation. He explained that within the last six to eight years, the surplus has shrunk from around $300 million dollars to less than $50 million.
Though both parties are committed to funding infrastructure projects this session, they will likely disagree on what constitutes “infrastructure”. Republican leaders qualified infrastructure as that which is “critical”, including roads, bridges, and sewers. Meanwhile Democrats, including Senator Jon Tester who submitted a letter to be read at the event, want a number of buildings to be considered for funding as well; Romney Hall at MSU, a veterans home in southwestern Montana, and the State Historical Society were a few of the buildings mentioned. Senator Sesso said that public-private partnerships should be considered as an option for funding.
Darryl James, Executive Director of the Montana Infrastructure Coalition (MTIC), addressed attendees later in the day on a package of bills the coalition is working on to support project funding. MTIC anticipates using bonds for a portion of infrastructure funding. Some of the bills to be proposed include increasing the fuel tax and capping the coal trust, as well as a local option tax (capped at 4%). If passed, stipulations of the local options tax would include mandatory property tax abatement, a limited list of taxable items to include largely luxury and tourist items, and some method of guaranteeing that revenue from an options tax would be used for “critical infrastructure”.
Aside from their disagreements on what constitutes infrastructure, leaders from both parties surprisingly agreed on their positions to oppose a local options tax and resist increasing the fuel tax, though both measures have the support of the Montana Chamber. On the local options tax, Senator Sesso said there are serious risks. Representative Eck said it was “not the direction we need to be heading.” Both Republican leaders on the panel agreed.
Speaker Knudsen addressed the proposal to increase the fuel tax, saying that it didn’t seem smart to increase a tax that will directly impact every Montanan, adding that county commissioners already have the authority to levy a 3% increase on the gas tax if they wish.
Rep. Eck said that her caucus supported tax credits for on-the-job training to help address the workforce shortage, as well tax breaks for companies that go public in Montana, and incentives for angel investors. Democrats also want to ensure that taxpayers are paying their “fair share”, said Eck.
Senator Sales advocated for cuts over credits, to let taxpayers keep more of their own money, he said.
Preparing tomorrow’s workforce
Public education funding is another item on the Democrats’ wish-list for the session. Eck voiced strong support for investments to address student load debt. Speaker Knudsen said that far too much emphasis has been placed on four year degrees over technical training and career-tech education, which he supports.
He shared a personal story comparing his starting wage as an attorney right out of law school with that of a friend who took a job, without a four year degree, as an electrician.
“My starting salary was $48,000 a year,” said Knudsen. “He [the electrician] took a job making $90,000 a year.”
On the issue of housing shortages, Republicans said it was not the place of government to get involved. Sales argued that building regulations are one of the things responsible for driving up housing costs and that less government, not more, was the answer.
Breakout sessions on Business Climate and Sustainable Entrepreneurship followed the morning panel. At the Business Climate panel, speakers discussed tax climate and workers’ compensation; both identified as key metrics on the Chamber’s priority list for the Envision 2026 plan.
Let’s talk about tax, baby
Bob Story, Executive Director of the Montana Taxpayers Association, addressed the fuel tax. He voiced concerns over when new revenue from a tax increase would go, saying that any new revenue generated from a tax increase should go to roads and local government. Story covered a number of possible tax changes, including business equipment tax.
He explained that increases in state revenue from higher income taxes come at the expense of a reduced local share of (property) taxes. Possible changes to the business equipment tax law may include either increasing the exemption or reducing the tax rate.
In 2015, Governor Bullock signed into law a business equipment tax exemption on new pollution control equipment, which sunsets after 10 years. The exemption was supported by the Montana Petroleum Association.
Michael Marsh, RPA, CPIA of Midland Crisis Claims discussed the impact of workers’ compensation on Montana’s overall business climate. Marsh said the disproportionately high cost of work comp insurance to employers, compared to neighboring states, impacts each of the Chamber’s core objectives under the Envision plan. Costs in Montana are nearly three times more expensive than in nearby North Dakota, driving businesses across the border.
“It gives the perception that Montana is anti-business,” said Marsh.
There have been improvements, however, in the work comp situation. Since 2007, Montana has fallen from the fifth most expensive state in the nation, to eleventh.
Attributing to the high cost, said Marsh, is one of the highest claim frequency rates in the country. Claim frequency in Montana is nearly double the U.S. rate, at an average cost of $64,000 per claim.
Solutions to address the high costs include minimizing administrative costs, encouraging competition, and working to eliminate workplace accidents.
WorkSafeMT, a now 100% private 501(c)3 based in Billings, produced a broad-based public service campaign to draw attention to the importance of workforce safety, and plans on boosting their social media engagement.
The final word
Prior to introducing the final speaker of the day, Chamber Board Chairman, Todd O’Hair with Cloud Peak Energy highlighted the importance of helping businesses of all sizes to promote a stronger business climate. He said there are often mixed feelings about big businesses, especially from out of state, adding that the Montana Chamber was committed to supporting all businesses, including those which could bring meaningful investments to Montana from other states.
Attorney General, Tim Fox made note of Governor Steve Bullock’s absence, saying that while some people joke that AG stands for ‘almost governor’, he’d accept ‘alternate governor’ as the final speaker of the event.
Fox touched on the negative impacts of federal overreach and an obstructive regulatory environment. The AG’s office has weighed in and filed suit on a number of issues widely opposed by other attorneys general across the country, including the Clean Power Plan, Waters of the U.S., the BLM venting and flaring rule, and others said to overstep the bounds of agency jurisdiction, and negatively impact Montana’s economy.
“Government, like industry, needs to play by the rules,” said Fox.
To close, he announced that his office has made tackling the rampant drug abuse problem a priority. Fox explained that federal law enforcement officers are seeing an increase of meth and heroin being brought to Montana. He also spoke about the devastating prescription drug abuse epidemic and the economic impacts of drug abuse on incarceration, treatment, and health care.
- Category: Montana Business
- Written by Jessica Sena, Montana Petroleum Association
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