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An Early Look at the 2019 Biennial Budget: Montana Needs a Balanced Approach to the State’s Revenue Challenges.

Montanans care deeply about the well being of their families and communities. They want a hopeful and prosperous future for their children and neighbors, safe communities, and a strong state economy that supports quality jobs and thriving businesses. As Montanans, we have come together at many pivotal moments in our state’s history to collectively build toward these goals. Together, we have considered not only what we can afford to accomplish today, but also the investments we must make
to protect our future.

During Montana’s 2017 legislative session, elected officials should be focused on wisely increasing and using the state’s resources to help build opportunities and a path to prosperity for all Montanans through the budget creation process. A recent, but short-term, decline in state revenue, caused primarily by declines in corporate income and oil and natural gas taxes and slower than anticipated growth in individual income taxes, has created significant challenges for the state’s elected officials.

The proposed executive budget creates a responsible blueprint for addressing these challenges through a balanced approach that includes a combination of difficult cuts and targeted revenue enhancers that bring more tax fairness to our system and ensure adequate levels of revenue. Unfortunately, key legislative leaders have indicated a dangerous unwillingness to accept this balanced approach and have instead started the budget process by imposing additional deep, unnecessary, and harmful cuts.

To shed light on the depth of these cuts and the programs and people they will impact, MBPC wrote a report – An Early Look at the 2019 Biennial Budget: Montana Needs a Balanced Approach to the State’s Revenue Challenges.

Supporting information can be found in two supporting documents.

Appendix A – Summary of Total Cuts Adopted in Legislative Committee Starting Motions

Appendix B – Partial List of Executive’s Proposed Revenue Enhancers

 

Montana Communities Cannot Afford the Oil and Gas Tax Holiday

Montana communities depend on revenue from oil and gas companies to fund important services like our schools. And yet, through policy decisions by the state legislature, Montana has given oil and gas production companies major tax breaks that have cost the state millions in lost revenue that could have been used to invest in our communities.

In 1999, the legislature created a tax break for oil and gas companies that lowers the taxation of oil and gas production during the most profitable period of extraction. At the time, proponents of the tax break claimed that it would encourage economic development in Montana’s resource-rich areas, a claim unsupported by the facts. In reality, oil and gas companies operate where there is oil and do not base their decisions on state taxes, which are just a small fraction of their total costs.

This tax break has cost the state and communities impacted by resource extraction tens of millions of dollars per year. The most recent boom in natural gas and oil production has created an increased strain on public services on structures. Rather than maintaining needed services like education, public sewers, water systems, and good roads, that would help Montana retain and grow jobs, the money was instead given to oil and gas companies as a tax break. In short, the oil and gas tax holiday is ineffective and has cost Montana millions in revenue for public services and infrastructure. It is time to take a hard look at the effectiveness of this corporate tax break.

Read our updated 2016 report Montana Communities Cannot Afford the Oil and Gas Tax Holiday: Tax Breaks for Energy Companies are Costing Us Millions.

Investing in Montana’s Working Families: A Montana Earned Income Tax Credit

In Montana, thousands of families are working hard for low pay and often struggling to get by. One of the most promising opportunities to support working families and boost our economy is the enactment of a state Earned Income Tax Credit (EITC). The Great Recession and other economic trends made it harder for Montana’s families to live above the poverty line. In fact, nearly 50,000 Montanans are working, but still living in poverty. A sluggish economic recovery increased the struggles for low-income families. In addition, the Montana income tax system taxes families at an annual income far below the poverty line, pushing them further into poverty. The federal EITC program has been one of the most effective anti-poverty programs in history, and a state-level credit could provide the same benefits to Montana families.

Here is our updated 2016 EITC report.

The Montana We Could Be: Tax cuts, aimed at the rich, take a toll

Montana today could be a more prosperous state. Through investments by our state, we could have more modern schools, better roads, updated water and sewer systems, and a greater access to a college education.

Our state does not have these things – not because of a natural disaster or a financial crisis brought on by things out of the state’s control. Instead, Montana is not the state it could be because of the decision made in 2003 to sharply reduce taxes. These tax cuts that mostly benefited the wealthiest Montanans have cost the state nearly $1 billion in one decade.

Read the full report The Montana We Could Be: Tax cuts, aimed at the rich, take a toll.

Helping People Balance Work and Family: It’s Within Montana’s Reach

Almost every employee experiences a temporary or extended illness, the birth of a child, or caregiving responsibilities for a sick family member, forcing the employee to take time off from work. However, the United States remains the only industrialized economy in the world that does not guarantee paid leave for new mothers or a paid sick leave standard, and one of a handful that does not guarantee leave for new fathers. While the Family and Medical Leave Act (FMLA) of 1993 was a necessary first step in helping individuals balance work and family demands, the law only guarantees unpaid leave and covers only those employees working full-time and for large employers. This policy leaves many working Americans without coverage and puts those taking unpaid leave at financial risk. As a result, states have started to enact their own family and medical leave policies. Today, three states, California, New Jersey, and Rhode Island, provide businesses and employees access to paid family and medical leave programs. Additionally, in 2015, twenty-three states and the District of Columbia introduced one or more paid leave proposals during legislative sessions in 2015.

In the last of our three-part report series on paid leave, we propose a family and medical leave policy for the state of Montana. The Montana policy would establish a self-funded insurance program administered by the state, ensuring that nearly every Montana worker receives access to paid leave when he or she needs time off for family or medical reasons. The policy’s benefit structure will ensure that the program is a viable option for low-wage workers. Through the use of a similar benefit and contribution structure as unemployment insurance, the state can minimize administrative costs. Finally, as a statewide insurance program, it would be an affordable solution for both workers and employers.

Read our full report Helping People Balance Work and Family: It’s Within Montana’s Reach.

Paid Leave in Four States: Lessons for Montana Policymakers and Advocates

The United States remains the only industrialized economy in the world that does not guarantee paid leave for new mothers or a paid sick leave standard, and one of a handful that does not guarantee leave for new fathers. While the Family and Medical Leave Act of 1993 was a strong first step in supporting individuals struggling to balance work and family demands, the federal law provides unpaid leave, an option that is not viable for many working families and for which 40 percent of working Americans do not qualify. As a result, states have begun enacting their own initiatives to provide paid leave benefits, including family and medical leave.

This is the second in a series of three reports on paid leave. This report focuses on the four states that have enacted paid family leave programs, and includes the various components of their policies in four sections: (1) legislative activities and process; (2) policy and program design, including benefit levels, financing, and implementation; (3) outreach efforts; and (4) utilization of benefits and awareness. This report also provides lessons learned that Montana policymakers and advocates can use to inform their own research and policy design.

The full report Paid Leave in Four States: Lessons for Montana Policymakers and Advocates is available here.

Paid Family and Medical Leave: Supporting Families, Businesses, and The Economy

Shifting work and family structures in the 21st century highlight the need for workplace policies that help parents balance caregiving and career demands. In collaboration with the Montana Department of Labor and Industry, the Montana Budget and Policy Center will conduct three reports on paid leave. This is the first report, which uses evidence from state-initiated paid leave programs, and national studies to examine how paid leave benefits families, businesses, and the economy.

>>>Read our first report: Paid Family and Medial Leave: Supporting Families, Businesses, and the Economy here.

 

A Two Generational Lens on Unemployment: Why Family Income Matters for Children

Periods of unemployment are common in today’s economy. Providing income support when workers lose their jobs helps child well-being, improves the chance workers will find a job that matches their skills, and strengthens communities as the jobless spend resources for necessities in their local economies. Two programs in Montana provide income support to adults without jobs: Temporary Assistance to Needy Families (TANF) and Unemployment Insurance (UI). However, neither program is fully geared toward a 21st century labor market in which workers are also caregivers and jobs are more insecure. While TANF poses its own set of challenges in providing adequate support for families experiencing poverty, the program and tribal TANF in particular, do provide insight into how a program can be structured to take a two-generation approach. As a critical benefit to families and the economy, UI needs to include a two-generation approach to effectively support today’s workers.

With the majority of women as well as men in the workforce, work and labor market conditions are inextricably linked to the well-being of children.

Studies demonstrate that inadequate family income and economic uncertainty can negatively affect children physically, socially, emotionally, and academically. But research also shows that increasing a family’s economic resources can positively affect child development, especially for younger children. Increasing parental income through employment and earning supplements has consistently shown improvements in school achievement among elementary school-age children. Other studies have also shown links between increased income and improved school readiness in young children.

To create economic security and stability for children going forward, we need to design an unemployment system that accommodates contemporary work and parenting patterns. This brief is the second in a series to assess how Montana can improve the lives of children by investing in their parents when they are unemployed.

Read our second report – A Two Generational Lens on Unemployment: Why Family Income Matters for Children.

 

Investing in Montana’s Working Families: A Montana Earned Income Tax Credit

In Montana, thousands of families struggle to make ends meet. One of the most promising policy opportunities to support working families and boost our economy is the enactment of a state Earned Income Tax Credit (EITC). The Great Recession and other economic trends made it harder for Montana’s families to live above the poverty line. In fact, Montana has over 27,000 families that are working but are below or near the poverty line. A sluggish economic recovery increased the struggles for low-income families. In addition, the Montana income tax system taxes families at an annual income far below the poverty line, pushing them further into poverty. The federal EITC program has been the most effective anti-poverty program in history, and a state-level credit could provide the same benefits to Montana families.

>>>Read our full report on the Earned Income Tax Credit and how it could help working Montana families.

 

Making Unemployment Insurance Work for Montana Workers

For workers and their families, the loss of a job can be devastating. Unemployment Insurance (UI) provides partial income replacement to the unemployed while they search for regular work. UI serves multiple important purposes: it keeps workers engaged in the labor market, the economy afloat during recessions, and supports families and their children when work disappears.

Despite the critical role UI plays for workers and the economy, access to the program has been declining over the last several decades. In the current economy, finding and keeping work can be an immense challenge, yet current public systems are failing to provide jobless workers with the support needed to sustain themselves and their families.

Although UI was designed as an insurance program to provide support for jobless, able-bodied workers, the program hasn’t adapted to meet the changing needs of the modern workforce nor has it ever adequately reached certain groups of workers. In order to create a support system that works for all of today’s workers, we must know who is and who is not receiving the assistance they need.

This paper looks at UI use and availability in Montana, a state with relatively high rates of UI use but low benefit rates; a state where recent modernization efforts have made the program more useful for many jobless workers but some groups still miss out on this critical insurance. Gender and racial gaps persist; Montana’s women and Native Americans are less likely to qualify for and use UI than their Caucasian, male peers. This paper explores those differences and identifies state policy solutions that would begin to close these gaps. There are concrete steps state policymakers can take that would make an immediate and significant difference in the lives of hard-working Montanans when they become jobless. Ultimately, reemployment is the goal for workers. However, as this is difficult in the current economy and the impacts on their families can be immense, advocates and policymakers must consider building a better UI system.

>>> Read the full report here.