Kids Count Report: How Montana’s Children Measure UP

Cute boy counting with calculator.It seems like blogging best practices suggests including cute pictures whenever possible. We couldn’t agree more since our work tends to be a bit on the dry side. Today’s post involves kids, and this little guy looks like the kind who would appreciate the data we are about to present.

Healthy and educated children improve our communities, our future, and our economy. When our children thrive, our state thrives. This week, the Montana KIDS COUNT, in conjunction with the Casey Foundation, released the most recent Kids Count data – a collection of measurements of how our children doing, and whether the quality of their lives have improved or worsened compared to past years and compared to other states. 

First, the good news – Montana is making strides in high school graduation rates.  Since 2005-06, the percentage of students not graduating on time dropped from 18 percent to 14 percent. This compares to the national average of 19 percent. Kudos to Superintendent Denise Juneau and all the school districts participating in Graduation Matters program. It’s working.

And now the not-so-great news – Montana scored worse or about the same compared to past years on many critical measurements of economic well-being and health. Almost one in five Montana kids are living in poverty, and 30 percent of children live in households where parents lack secure employment. And while we’ve made great strides with Healthy Montana Kids to get more children covered by health insurance, there are still 11 percent of children in Montana without health insurance, compared to only 7 percent nationally. 

More children are enrolled in preschool, but the percentage of children not attending preschool is still significant – 60 percent. This is an area where we’ve been quite focused and where the Governor is looking to invest state funding for quality pre-K programs across the state. It should not be underestimated how important this is for our economy – children attending pre-K programs are more likely to be prepared for kindergarten, more likely to graduate high school and attend college, and less likely to be incarcerated. 

We have to ensure ALL Montana’s children are provided the quality of life, access to health care, and the education they need to succeed. It will pay dividends for our economy.

Wonky Word Wednesdays: Appropriation

Deciding how the state invests our tax dollars is critical to how our state supports its citizens and improves our overall economy. It is this part of the process – who receives what and why – that makes the legislature so fascinating (at least for geeks like me).  With that in mind, let’s tackle one of the most important and most used words of the budget process – appropriation.

What does appropriation mean?

An appropriation is authority given to a government agency or institution to spend a specified amount of government money. In other words, it is the government giving a green light to spend a set amount of money for a set purpose. No state money can leave the state treasury without an appropriation, and the Montana Constitution does not allow appropriations to be made for religious, charitable, industrial, educational, or benevolent purposes to any private individual, private association, or private corporation not under control of the state. 

How are appropriations made in Montana?

If you remember back to your high school government class – it is the legislative branch that has the “power of the purse.” In Montana, every bill containing spending or an appropriation must start in the House of Representatives. Each of these appropriations bills is assigned to the House Appropriations Committee.

An appropriations bill must have a favorable vote out of this committee and pass the entire House of Representatives by the 67th day of the Legislature – called a transmittal deadline. From here the system basically follows School House Rock model. It then it goes to the Senate, where it will be assigned to the Senate Finance and Claims Committee.  From there, it must pass the full Senate, pass conference committee if there were changes to the original legislation, and eventually receive the signature of the Governor.

How many appropriations bills are there?

Most of Montana’s appropriations to fund the functions of state government are contained in the main spending bill called the General Appropriations Act. It is more commonly referred to as House Bill 2 (HB2). Don’t worry, we will go into great detail about HB2 at a later wonky word. However there are other appropriations bills, including long-range planning (another wonky word for the future) and “cat and dog” bills. I’m not making this term up. Walk through the halls in Helena and people will know exactly what you are talking about. There are many important pieces of legislation that these “cat and dog” bills fund including HB 1, which funds the entire legislature. However the term refers to legislators having “pet” projects that often require state spending.

Appropriating our tax dollars is one of the most critical roles of our Montana legislature. We will continue to drill down into variety of words associated with appropriations and the Montana state budget in future installments. 

Are there any wonky budget words you want us to explain? Email me at tjensen@montanabudget.org or post something to our Facebook page.

Glacier National Park: A Smart Public Investment

The Montana Budget and Policy Center advocates using our tax dollars to invest in infrastructure and policies that create jobs and boost our state economy. Glacier National Park is a great example of a smart investment. Not only is it my favorite place to visit, but also according to a news report yesterday, Glacier generated $179 million in economic benefit in 2013.

It is clear that Glacier is more than beautiful hikes, powerful waterfalls, and fresh mountain air for the Montanans that love it. It brings in 2.2 million visitors from all over the world and supports 2,824 jobs in the area.  

You can read the full report, which gives a wide range of information about the value of national parks. One significant stat is that tourism to national parks returns $10 for every $1 invested across the country. Talk about a bang for our public buck. Can you imagine if that was the return on your personal investments?

We need to keep thinking of our tax dollars as investments in the future. Parks bring in tourists, bridges and roads make it easier for businesses to flourish, and schools create an educated workforce. 

Protested Taxes: Local Communities Left in Limbo

Last week, the Montana Department of Revenue announced a settlement agreement with Verizon Wireless related to how the Department would value Verizon’s property for calculating property taxes.  This settlement, along with the recent agreement between the Department and Charter Communications, meant the release of tens of millions of dollars in tax revenue to schools and local governments after years of these funds sitting in protest escrow accounts. This scenario happens all the time with large statewide companies claiming their taxes should be lower, and local governments and schools districts are often faced with the uncertainties on how this will impact budgets.

Yesterday, we explained what protested taxes are.  Today, this post will dig deeper into how these protests impact our local economies.

The process in which a taxpayer can raise questions about the property taxes assessed on his or her property is an important one. It gives the taxpayer a formal way to present issues about improper valuation of property or other issues. It also sets a process for the Department of Revenue and the taxpayer to reach an agreement.

When we think of a tax protest by a residential homeowner, we are generally talking about a few hundred or a few thousand dollars. However, it is an entirely different story when we talk about the tax protests of large statewide, centrally assessed companies. 

In the Verizon case, the company had protested over $32 million for tax years 2009 through 2013, approximately 70 percent of what they owed in those years.  Since 2009, these funds have been sitting in protest tax escrow accounts, and local governments and school districts have been unable to use the funds. (In some cases, local governments and school districts are entitled to use some of the funds, but then they run the risk that if the company eventually wins its tax protest, the local government is responsible for paying interest on any funds returned. It is understandable that local governments and school districts are hesitant to use these funds.)  In the settlement announced last week, Verizon will receive back about $10 million, less than a third of what it was protesting. And after five years, our schools and local governments will finally receive over $20 million in taxes paid by Verizon.

The tax protest by Charter Communications is similar. Over $34 million had been held in protest. Of this, schools and local governments will finally receive about $25 million. That’s about 73 percent of what Charter had been protesting.

Industrial companies have also been known to protest millions in property taxes. One recent case is CHS, Inc., which protested over half of the property taxes assessed in its Laurel refinery since 2009. At the end of the day, CHS received back about $4.7 million, a 15 percent reduction. And after four years of waiting, schools and local governments finally received over $11 million, the lion share of taxes stuck in protest escrow accounts.

Generally speaking, there isn’t much disincentive for a corporation to protest a significant portion of the taxes it was assessed, regardless of how much that company may believe is in question. As mentioned above, a local government may be responsible for paying interest on protested taxes that it spends.  There is no similar consequence for a company that protests a far greater amount than it receives back in the end. There is little stopping Charter or Verizon from protesting nearly all of its taxes even if it believes only a small portion is in error. As a result, local economies are in limbo – sometimes for years – for settlements to be reached and funds to flow back into communities.  

It is also important to note that when a company gets a cut in property taxes, it often means that the tax responsibility is shifted to other property taxpayers, namely homeowners and small businesses.

Clearly, it is important that all taxpayers – homeowners, small businesses, and large corporations – are taxed in a fair and accurate way that ensures due process. However, it is worth thinking through how we can make sure our local governments aren’t stuck waiting for the funds it needs to keep our schools running, police on the streets, and other government systems working for the community.

Wonky Word Wednesdays: Protested Taxes

As you may remember, the Montana Budget and Policy Center was heavily involved in the push against I-172 – the Charter Communications ballot initiative. We even did one of our first wonky words on centrally assessed property taxes to help explain the issue. Last week, the Department of Revenue announced a settlement with Verizon (which we will explain in detail tomorrow), and this week the Montana Revenue and Transportation Interim Committee will talk about other pending litigation. These cases involve companies protesting taxes. So lets spend this week’s wonky word digging in to the issue of protested taxes.

Like many Wonky Words about taxation, this explanation begins with Montana’s Constitution passed in 1972.  The Constitution required the legislature to establish an “independent appeal procedure for taxpayer grievances about appraisals, assessments, equalization, and taxes.” Basically, Montana is required to have a system where people or companies can argue they have been taxed incorrectly and seek some sort of solution. So the state created the State Tax Appeal Board, along with County Tax Appeal Boards.  

Now there are formal ways to protest your taxes if you or your company believes your taxes have been assessed incorrectly. Missoula County even has step by step instructions to use. It is important to note that in Montana, when it comes to disputing property taxes, state law requires the taxpayer to pay the taxes, but under written protest. 

Property taxes comprise 12 percent of the revenue collected in Montana. That seems small, but not when you consider that 81 percent of property tax revenue is invested in local governments, including supporting local schools, public safety, and maintaining infrastructure. Property taxes are a critical piece of local government budgets.

When a company like Charter Communications protests its property taxes, the company pays the taxes, but those funds are held in an escrow account by the state. Generally speaking, those funds are unusable until the situation is resolved. This means that those local governments and schools are left with holes in their budgets – sometimes for years – until a settlement is reached.

In the US, individuals and businesses should have a system to dispute when an error has been made regarding taxes or other issues. People and government make mistakes, and there must be systems in place to correct those mistakes. However, it is important to realize the impact of large companies protesting significant portions of its taxes and what that means for our roads, schools, and local governments.

Tomorrow on the blog we will dig into the Verizon settlement and the issues surrounding protesting taxes.

Next week’s word will be back on the state budget. Thanks for being a part of wonky word Wednesdays.

“Getting by” Without a Bank

The Atlantic just published a great article on how difficult it is to handle money issues when you are poor. When You’re Poor, Money Is Expensive raises important questions about the role of traditional banks in our country and how complicated “getting by” can be.

My first thought when reading this article was the impact payday lending has on people’s lives. The subjects of this piece started with a loan of $450 and ended up owing more than $1700 with interest and fees. In 2010, Montana voters passed I-164, setting strict caps on payday lending which virtually eliminated this type of lending in our state. The National Conference of State Legislatures charts how other states handle the issue.

As I continued to read, I thought about how our society judges those who live in poverty and struggle to pay bills. People wonder why it is so hard and how can people fall so far behind. It is important to know that one in four Montanans are either unbanked (meaning they do not have a checking or savings account) or underbanked (meaning they may have a bank account but rely primarily on alternative – and costly – financial services, like payday loans, check cashing services, and nonbank money orders). 

The reasons why individuals do not use traditional bank services are varied. In rural places, especially on reservations, there are few, if any, banking institutions. Traditional banks often don’t fit the needs of low income individuals. People living in poverty need money orders, phone cards, wire transfers, and other services that payday lenders provide. Some do not trust banks, understand the rules and formalities, or are afraid of creditors or the government seizing assets. In addition, the inconsistency of paychecks can discourage employers from offering direct deposit. Then people must rely on paper checks to get paid, but to cash them, these individuals often are charged cashing fees. Adding the complication, without a checking account, cash must be delivered in person to pay bills – wasting valuable time and money.   

The article says that unbanked families spend 10 percent of their money replacing traditional banking services. Can you imagine using 10 percent of your income like that? No wonder families are stuck in poverty – each paycheck is gone as soon as it is received.

As I continue to think about this piece and how too many families are just one emergency away from ending up in these situations, I am glad I work at the Montana Budget and Policy Center. We will continue to work on issues like Medicaid Expansion, earned income tax credit, unemployment insurance, and other policies to help low-income families make ends meet. We want to give all families the opportunity to move ahead and plan for the future.

Wonky Words Wednesdays: General Fund

Did you know that the Montana Office of Budget Program and Planning (OBPP) is in full budget planning for the next Legislative Session in 2015? In order to get everyone up to speed by January, I decided that we need to start working our way though the numerous wonky words contained within the Montana state budget. Aren’t you excited?

Our lead off hitter is (drum roll please) – General Fund. Many people have heard of the general fund and can make a relatively good guess as to what it means. However, wonky word Wednesdays is more than taking a good guess. We want to have a working knowledge of what these words mean. 

The general fund is the money available for the state to use for most of its functions. General fund dollars do not include payments from the federal government or sources that restrict funding for specific purposes. The Legislative Fiscal Division wrote a great report on the budget and has helpful information on this topic if you want to dig deeper.

FY13 general fund

Think of the general fund like your main checking account. You pay for most of your bills out of this account. However, it is not the only money you have. You also have a retirement account, savings account, health and education savings accounts, or other pools of money to pay for specific things.  We will get into the “other pools” of funds the state has at a later date. 

Why is the general fund so important?

The general fund receives the most attention because it is 40% of the entire state budget totaling approximately $1.8 billion in FY15. About half of these funds come from state income taxes. Most importantly, money in the general fund can be used by the state for almost any purpose. So when a legislator wants to invest in a new program, he or she looks to the general fund to support it. The state invests over half of the general fund dollars into education. (We will talk more about how the general fund is used in a future edition of Wonky Word – appropriation.)

There are few wonky words as important to the lives of Montanans as general fund because we are all impacted by these dollars. We hope you will join us in working with legislators to help them balance the needs in our state with the limited resources available.

Keep checking back because we are going to get very wonky moving forward. Some of the budget words we will cover will include: appropriation, HB2, special revenue, ending fund balance, proprietary funds, present law adjustment, and so much more. Do you have other suggestions? Email me at tjensen@montanabudget.org or post something to our Facebook page.

State Tribal Colleges: An Important Investment

Investing state funds in tribal colleges is a smart use of state dollars. Tribal colleges benefit our state by providing a quality, affordable higher education to students regardless of race. The tribal college system in Montana stimulates our economy and increases the pool of individuals who are trained and ready for work. 

Tribal colleges rely primarily on federal funding provided through the Tribally Controlled Colleges and Universities Act. Under this Act, the federal government provides tribal colleges with funding based on the number of students who are members of a federally recognized tribe. These students are referred to as “beneficiary” students, and on average tribal colleges in Montana receive $5800 per eligible student enrolled.   

As we mentioned last week, “nonbeneficiary” students – students who do not belong to a federally recognized tribe but attend a tribal college – do not receive any federal support. This means that tribal schools must cover the costs of these nonbeneficiary students. 

In response to this funding gap, in 1995, Montana policymakers approved the Tribal College Assistance Program (TCAP) to help offset the lack of subsidies for nonbeneficiary students. Yet, while TCAP has provided much needed dollars to the tribal colleges, the per-student funding has fallen well below support of ‘traditional’ Montana schools.

As the graph below shows, per-student funding for Montana’s non-tribal two- and four-year colleges is nearly double the amount provided for non-beneficiary students at tribal colleges.

Tribal College Funding

 

 

Source: Mitchell et al., “States are Still Funding Higher Education Below Pre-Recession Levels,’” Center on Budget and Policy Priorities May 2014 and Montana Legislative Fiscal Report 2015 Biennium. 

*This number includes a one-time-only increase of $523 per student. Ongoing TCAP amount is $2,481 per student.

 

State policymakers should look to change the way the tribal college funding is determined. One potential solution is to align tribal funding with how community colleges in our state are funded.

But the bottom line is the tribal colleges in Montana play a critical role in Montana’s higher education system. Only a handful of other states have taken the opportunity to support tribal colleges – an investment which pays off with a more educated workforce and a stronger economy. Increasing the resources available to tribal college students would only expand that opportunity and push Montana even further ahead. 

The High Cost of Child Care: State Funding for Pre-K Would Benefit Montana Families

State funding for pre-Kindergarten is an opportunity to strengthen our state’s economy and help Montana’s hard working families.

The cost of high-quality child care is a significant obstacle for many working families. Many parents face frustrating choices: pay an excessive portion of their income in child care costs, choose lower-quality care, or quit their jobs. For families working hard to build an economically secure future, none of these choices are good options. Due to the steep cost of child care and incomes lower than the national average, Montana is ranked the 11th least affordable state for child care in the nation.

Quality, state-funded pre-K programs can help offset some of the child care costs that Montana families struggle to afford. Today, Montana is one of only eight states that does not provide any state funding to help pay for pre-K classroom programs. With child care for one four year old costing 13% of the average Montana family’s income, child care costs are a significant struggle for many families. State funding for quality pre-K programs could help offset some of these costs, improving the lives of our families and children.

>> Read MBPC’s full report here.

>> Read our blog post here.

 

On the Blog: US vs Belgium

Last week, we watched US play Germany and throughout the match discussed the various scenarios that would allow us to move on to the knockout bracket. Fortunately, USA made it! So we thought we would make the country comparisons a series as long as the US continues to stay alive at the World Cup. 

So on to our next head to head – US vs. Belgium.world cup soccer ball

Beer

I don’t think we can talk futbol or Belgium without talking about beer. In Montana, we love our beer. According to the Montana Brewers Association, there are 40 licensed breweries operating in the state that generate approximately $26 million of revenue and employ more than 350 employees. However, as proud as we are of our beer, Belgium is known for one thing – beer. And fries. Or chocolate. Anyway, Belgium is home to the world’s biggest brewer – Anheuser-Busch InBev that produces one in five beers sold around the world. (But guess where it gets the barley to make that beer?  Yep – Montana.)  Belgium also makes a bigger range of beer than any other country —1,131! We should also note that it is much cheaper to by beer in Belgium – 42.19% cheaper.

Employment

Thank goodness it is cheap to buy beer in Belgium because there are few jobs to go around. In Montana, our unemployment rate was a 4.8% in April. As proud as we are of this number, we know that there are still too many people struggling to find work and livable wages. However, I was shocked when I started researching Belgium to discover that it has a 17.8% unemployment rate! According to this report, it ranks in the bottom 5% in terms of jobs. Ouch!

Education

In Montana, our high school graduation rate was 84.4% in 2013. According to this report, 91.7% of our workforce has at least high school education compared to only 74.2% in Belgium. There are many factors that influence these numbers.  However, we know that education is important to economic growth, and these numbers seem to back that up. 

So even though Belgium beats us in beer production, we pull ahead in terms of jobs and education. Hopefully we will come away from this match later today victorious as well.

GO USA!!!

Many of our comparisons came to us from Numbeo, an online database of user-contributed information and OECD Regional Well-Being.