Reports
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The Montana Budget and Policy Center is hiring a State-Tribal Policy Analyst to conduct research and analysis on state budget and tax policies impacting Indian Country in Montana. For more information, click on the job description below.
Beyond Unemployment: Finding Work in Montana
Over seventy thousand Montana workers can’t find work or can’t get the hours of work they need to make ends meet. But stagnant, high unemployment is not just a problem for the jobless. A strong economy is dependent upon a strong middle class. This means access to good jobs, wages, and benefits for a hard day’s work. When tens of thousands of Montana workers are unemployed or underemployed, economic growth and prosperity are limited for all Montanans.
This report will serve as a reminder to our policymakers that our first and primary focus must be on building an economy in Montana that will encourage job growth.
The State of Working Montana 2011
The State of Working Montana series explores the state of Montana’s economy from the perspective of its workers and documents how they are faring. In every report in this series, our analysis goes beyond the top-level indicators that many use to evaluate the Montana economy. Instead, we focus on what matters to people who live and work in Montana.
Proposed Medicaid Cuts Would Cost Jobs
The pivotal debate currently underway in Congress on how to address the federal deficit will undoubtedly have an enormous impact on our nation, our state, and our collective ability to address priorities from Social Security and health care to education. For example, many of the proposals being discussed would result in deep cuts to Medicaid. In addition to jeopardizing the health of many of our most vulnerable neighbors, the Medicaid cuts could have a devastating impact on the struggling economies of every state in the nation, putting hundreds of thousands of jobs and billions of dollars of economic activity at risk. Considering the state has only gained 7,500 jobs since the lowest point of the recession, these proposed cuts to Medicaid could eliminate over half of all jobs gained since Montana began its recovery.
2013 Biennium Budget: Long-Term Prosperity Will Require Better Choices
In Montana’s 2011 legislative session, a majority of legislators proposed deep, unnecessary, and harmful cuts to vital public services like education, health care, and job training. The resulting damage to our families, communities, and economy was only prevented by last-minute negotiations with the governor. While the budget compromise restored funding to many vital public programs, some harmful cuts remain. The cuts were unnecessary. The Legislature balanced its budget using out-of-date and overly pessimistic revenue estimates, refusing to act on updated estimates from their non-partisan staff and even higher estimates from the governor’s office.
Proposed Budget Is an Anti-Jobs Bill
With Montana’s economy in a timid recovery, “jobs” has become the buzzword of this legislative session. However, if the actions taken by the Legislature are ultimately adopted, they would destroy thousands of jobs across the state of Montana. The proposed budget would weaken Montana’s essential public services, hurt hard-working families, and divert Montana from a path to long-term and widely-shared prosperity.
Budget Numbers Don't Add Up For Montana's Children
Montana’s 62nd Legislature is now twelve weeks into the session, and the proposed state budget has passed from the House, Senate Finance and Claims, and is scheduled to be heard on the Senate floor as early as next week. This preliminary budget includes unnecessary and harmful cuts that jeopardize the quality of schools, place our seniors’ health care at risk, and cause long-term harm to our vital public services. Unfortunately, the proposed cuts also stand to endanger the future of Montana’s greatest asset- our children. Over $130 million of the cuts directly impact Montana’s children.
The Importance of Public Health Care Funding to the Montana Economy
In this 2010 report, the Bureau of Business and Economic Research at the University of Montana found that for every $10 million removed in federal and state support for health care in Montana:
- 144 jobs would be lost economy-wide
- $6.6 million in earnings would be lost economy-wide
- $11.9 million in industry sales would be lost economy- wide
Investing in Montana's Future: A State Earned Income Tax Credit
In Montana, thousands of families across the state are working but still struggling to make ends meet. Recent economic trends have made it even harder for working families to live above the poverty line. Montana has over 17,000 families that are working but poor.
A state EITC would provide a much-needed economic boost to these hardworking families and their communities. Indeed, the most efficient way to stimulate the Montana economy is to support low-income families who are likely to immediately spend that support in businesses and communities across the state.
Flying Under the Radar: Time to Evaluate Tax Expenditures
The legislature is considering ways to balance the state budget. Despite some rhetoric to the contrary, there are plenty of mechanisms available for maintaining our investments in education, health care, and other public services. One option is to scrutinize tax expenditures to determine if any are obsolete or ineffective. Tax expenditures quietly drain the state of million of dollars in revenue every year. In fiscal year 2009 alone, we lost $375 million, which amounted to 20% of the state’s general fund budget that year.
Preliminary Cuts are Unnecessary and Ill-Advised
The Montana Legislature has made hundreds of unnecessary and harmful preliminary cuts that jeopardize the quality of schools, place our seniors’ and children’s health care at risk, and cause long-term harm to our vital programs and services. As of March 1, the Legislature has made $224 million in cuts to the governor’s proposed budget and recommendations. This report provides an analysis of some of the preliminary cuts made to core public services and the harms that would result if they are passed.
Updated: Legislative Budget Committees Make Cuts That Will Harm Families and Economic Recovery
Montana has the option to maintain core public services that educate our children, keep our families and communities healthy and safe, and help our most vulnerable neighbors make ends meet. These programs also create jobs for teachers, nurses, and other workers throughout the state. Unfortunately, the legislature’s budget subcommittees have slashed many of these services, threatening the health and safety of our communities now and our prospects for sustained and shared prosperity in the future.
State of Working Montana 2010
The State of Working Montana series explores the state of Montana’s economy from the perspective of its workers and documents how they are faring. In every report in this series, our analysis goes beyond the top-level indicators that many use to evaluate the Montana economy. Instead, we focus on what matters to people who live and work in Montana.
Resources on Legislature's Preliminary Cuts to Education and Public Services
As of Feb. 18, 2011, the Montana Legislature has made cumulative decisions that would bring the next state budget $224 million below the governor's proposed budget. This includes over $130 million in cuts to the Department of Health and Human Services alone. The appropriations subcommittees have completed their work. It is now up to the House Appropriations Committee to decide how much of our public investments in education, health care, and infrastructure to restore.
The following links provide an overview of the cuts made so far and details by agency where available.
Fund Transfers are Prudent and Have Precedent
Previous legislatures have shown bipartisan support for using one-time-only fund transfers and other revenue enhancements. In general, fund transfers can be wise fiscal policy during economic downturns because they prevent cuts to core services when Montana families and businesses are struggling. The benefits and risks of each of these individual fund transfer proposals deserve to be debated on their own merits, but the idea of short-term fund transfers should not be rejected wholesale.
Early Budget Plans Bode Poorly for Montana
The recession has cost our state jobs and revenue for services. Unfortunately, a plan to start the new budget almost $500 million below the Governor’s balanced budget proposal will make matters worse by making unnecessary cuts that will hurt the economy and families.
To create new jobs, local economies need a boost—not cuts. If the legislature continues with their plan, they will begin the session by automatically implementing over 200 cuts hidden in procedural decisions without a transparent discussion of their impacts. These cuts will decrease income for Montana families and businesses, hurt vulnerable children and cost the state more in the long run.
Making Sure All Taxpayers Contribute What They Owe
Most Montana families and businesses lawfully pay the taxes they owe, and in the process they help fund public education, infrastructure, public health, and job training programs that move our economy and our communities forward. Unfortunately, not all taxpayers are paying the money they owe, and the result is less funding for the public structures and services that drive growth and recovery.
The Department of Revenue has estimated that the state has a tax gap of $312 million.1 The tax gap is the difference between the amount of tax legally due in a given year and the amount that taxpayers voluntarily pay in a timely manner. Recently, the Department of Revenue has substantially improved audit collections. However, in order to further close the tax gap and raise needed revenue for public services, additional tools are needed. By implementing these tools, Montana can improve tax compliance, maintain a system where everyone plays by the same rules, and raise revenue for essential public services, simply by enforcing our current tax laws.
Menu of Revenue Options for a Balanced Approach to Montana’s Economic Recovery
Legislators are already considering options for closing the revenue shortfall in our next state budget. Unfortunately, most of the options being considered are cuts to the programs that educate our children, keep our families and communities healthy and safe, and help our most vulnerable neighbors make ends meet. These programs also create jobs for teachers, nurses, and other workers throughout the state. A cuts-only approach will result in laid off workers, cancelled contracts, students unprepared for a new economy and a further drag on our already struggling economy.
Legislative staff has released over 100 options for dealing with our budget challenges; the vast majority propose harmful cuts to state services, and only a few of them find new ways to raise revenue.
The Montana Budget and Policy Center offers the following menu of revenue options as potential mechanisms for meeting our revenue challenges with a more balanced approach. We offer the menu as a first step in demonstrating the diverse options that exist for maintaining funding for the public structures that make Montana a great place to live and work.
Public Service Job Losses Threaten Montana’s Recovery
The Great Recession cost Montana thousands of jobs. Montana has experienced recessions in the past, but this time job losses have been more severe and continued longer than in previous recessions.
Montana can respond to the recession-induced economic challenges in ways that protect families and prepare us for a more prosperous future. In order to protect Montana’s job numbers from slipping further, state policymakers can protect the economy by taking a balanced approach to the budget that includes revenue increases to meet today’s needs and start planning for our future. Balancing the budget through cuts alone will lead to unnecessary lay-offs and a further drag on an economy struggling to recover.
A Legacy of Inequality for American Indians in Montana
The twelve tribal Nations and seven Indian reservations of Montana encompass richly complex diversity, cultures, histories, talents, and resources. The tribal Nations and their members have contributed immeasurably to the development to the state’s history, culture, and economy. Unfortunately, just as Montana’s tribes influenced our nation’s and our state’s development, the U.S. government has had a profound and sometimes devastating impact on the nation’s American Indian population. In this installment of the Montana Budget and Policy Center’s State of Working Montana, we explore dramatic racial and economic inequality plaguing Montana. While a recounting of the complex history between the federal and state governments and Montana’s tribal Nations is beyond the scope of this report, the data analysis provided here is, in many ways, the legacy of centuries of damaging policies and practices by the federal government and lingering negative
Impact of Recovery Act Direct Assistance Provisions in Montana’s Economically Stressed Communities
The economic recession has challenged Montana—hardworking people have lost their jobs, savings have dwindled and families continue to struggle to make ends meet. However, for some communities in Montana, the recession was not the beginning of the economic crisis. These economically stressed communities suffered greatly compared to their neighbors well before the recession started. High unemployment, low levels of education and a lack of working age adults have prevented these communities from thriving, and these problems were only further compounded by the recession.
Can Montana Afford an Oil and Gas Tax Holiday?
Years ago, the legislature created a tax break for oil and gas companies that now costs the state tens of millions of dollars per year, and does not deliver on its promise of economic development. The dollars given to oil and gas companies as a tax holiday would be better spent maintaining public structures like education; public sewers and water systems; good roads and healthy communities that help Montana retain and grow jobs.
In short, the oil and gas tax holiday is costing Montana valuable revenue for public services. It’s time to take a hard look at the usefulness of this corporate tax break.
Income Tax Bracket Collapse is Costing Montana
In 2003, the Montana legislature made significant changes to Montana’s income tax system through Senate Bill 407 (SB 407). The changes enacted in SB407 have had a significant negative impact on Montana’s revenue streams, yet are often ignored in discussions about the state’s current revenue challenges. In 2005, SB 407 decreased total income tax revenue by $100 million (13%), with almost half of the benefit going to families earning incomes over $500,000 per year.
In order to protect our future, we need a tax system that maintains the schools, roads, and natural resources that create opportunities for all Montana families. With Montana facing potentially severe and damaging cuts to these public structures, it’s time to take a hard look at the usefulness of SB 407’s costly tax changes.
This policy brief will analyze the impact of one portion of SB407--changes made to Montana’s income tax brackets. MBPC finds that the bracket collapse has been unaffordable, disproportionately targeted to upper income Montanans, and ineffective as a tool for economic growth.
Montana’s Revenue Challenges and Why It Matters
The Montana state budget is how “we the people of Montana” identify, prioritize, and fund the public structures and services that help create our safety, prosperity, and stability. Unfortunately, Montana, like virtually every other state in the country, is feeling the effects of the recession. As individual and corporate incomes have fallen, we have seen a record-breaking decline in our state’s revenues.
Funding for schools, roads, parks, libraries, law enforcement, prescription assistance for low-income seniors, fire protection, regulatory systems, child care assistance for working families, and numerous other public structures and services are at stake.
This report is designed to inform advocates and policymakers alike about the current revenue crisis, why it matters, and how policymakers can meet the crisis with a balanced approach that builds a brighter future for the next generation of Montanans.
What Health Reform Means for Montana
Each year, over 150,000 Montanans struggle to provide health insurance coverage for their families. For thousands more, the cost of health insurance is making it harder and harder to meet their families’ other basic needs.
The health reform package recently passed by Congress may not solve all of our health care system’s underlying problems, but it will bring coverage to thousands of Montana families who had been living without access to affordable health care, at relatively low cost to the state of Montana.
This edition of the State of Working Montana explains how health reform will improve access to care in Montana. While we do not cover every provision included in the bill, we have kept a sharp focus on how the bill improves affordability of insurance and access to coverage for the uninsured.
Capital Gains Reform Will Strengthen Montana
In 2003, the Montana legislature passed a capital gains credit that benefits a very narrow part of our population, at the expense of public programs from education to health care. Montana is one of just nine states offering a significant tax break for capital gains income.
This report explains how the capital gains credit is costing Montana valuable revenue, and why we need funding for our public structures more than ever.
Montana Can Bypass a Costly and Ineffective Federal Tax Break for Corporations
Like most other states, Montana’s revenue has been dropping dramatically
over the past year. A little-known contributor to the declining revenue
is a federal corporate tax break that is hurting our revenue stream and
was never approved by the Montana legislature.
This report
explains the impacts of the Domestic Production Credit, and shows how
its elimination will help Montana solve its revenue crisis.
Montana Can Bypass a Costly and Ineffective Federal Tax Break for Corporations
Montana’s tax code is based on the federal tax code, so deductions passed at the federal level are automatically implemented at the state level, unless specifically disallowed by the state. The federal “domestic production deduction” tax break doesn't make sense as state policy, and is estimated to cost Montana $6 million in revenue in fiscal year 2011, at a time when we need all available revenue to maintain education, health care, and other vital public services.
How the Recovery Act Benefits Montana
The American Recovery and Reinvestment Act passed by Congress last year did a lot to jumpstart growth in Montana. Jobs, services, and investment have stayed afloat thanks to this crucial piece of legislation. It's hard to imagine how much worse things would have been without the stimulus package.
This report details how the ARRA kept people working, services functioning, and money flowing due to its injection of spending into our economy.
Emergency Spending Cuts Can Be Minimized and Targeted to Avoid Further Harm to Economy and Montanans
Because of declining state revenue, Governor Schweitzer will be required to make emergency cuts to state spending. According to a new MBPC report, cuts can be limited to approximately $31 million, compared to the $47 million in reductions government agencies have analyzed. The report outlines recommendations designed to protect the already struggling state economy and Montana families working hard to make ends meet.
The 2011 Biennium Budget: Maintenance, Recovery, and Future Cuts
The 61st Legislature faced the unenviable challenge of balancing the budget during a time of economic downturn and extreme revenue uncertainty. Despite a large influx of federal recovery act funding, some of the decisions made by the legislature may lead to cuts in vital programs like education and healthcare, either now or in the future. Many of the cuts are slated for the 2013 Biennium (July 1, 2011 to June 30, 2013) and need not occur if the 62nd Legislature is willing to fill holes created by decisions of the 61st Legislature.
Montana Economists Join Hundreds across the Nation in Urging States to Maintain Public Services
Six Montana economists have joined over 200 economists from 38 states in signing a letter urging state governments to “maintain the public services that are critical to the health of the economy and the well-being of working families,” because “cutbacks at this time would further slow the economy and harm those already hardest hit by the downturn."
New Census Data Shows 175,621 Montanans without Health Insurance Coverage in 2008
New U.S. Census Bureau data shows that 175,621 Montanans, or 18.5% of the population, lacked health insurance coverage in 2008. That number would be significantly higher without public health care options such as Medicare, Medicaid, and Children's Health Insurance. An additional 234,834 Montanans, or 24.7% of the population, were covered by public health insurance. The number of uninsured for 2009 will likely be much worse because we are now deeper into the recession.
Restoring Revenue and Fairness: A New Top Marginal Rate for Taxable Income
House Bill
395 (2009) attempted to restore some of the state revenue lost as a result of SB 407 (2003). SB 407 provided a variety of tax cuts to Montanans, but the highest-income Montanans have received most of the benefits from those cuts, and the
costs to the state were far higher than anticipated. HB 395 would restore
some of the revenue lost as a result of SB 407 by creating a new top tax bracket on households earning more than $250,000 per year. HB 395 would also restore some of the progressivity of the Montana income tax system and affect less than 1% of all Montanans.
The Business Equipment Tax in Context
During times of economic downturn and revenue uncertainty, any proposals for decreasing revenue (i.e. cutting taxes) must be carefully scrutinized. One of the only new tax cuts being seriously considered during the 2009 Legislative Session is a reduction in the business equipment tax. The effective tax rate on business equipment has already been reduced dramatically over the last decade; further decreases during an economic downturn will mean decreased revenue to the state and reduced funding for other spending priorities or tax cuts that could have a greater impact on both average Montana families and the economy.
Federal Stimulus Funding Available to Montana Tribes
The $787 billion American Recovery and Reinvestment Act of 2009 (ARRA) provides many funding opportunities for tribal governments. Some of these opportunities are contained in Montana’s House Bill 645, the state appropriation of federal stimulus dollars.This brief outlines some of the funding opportunities for tribal governments in HB 645. It also outlines significant funding sources in ARRA that may be allocated directly from the federal government to Montana tribes, primarily through grant applications.
Dispelling Myths and Misconceptions about State Government, the Budget, and Federal Stimulus Dollars during a Recession
The Montana Budget and Policy Center addresses some common misconceptions surrounding appropriate use of stimulus dollars during the recession.
Senate Bill 407 did not Expand the Economy
Senate Bill 407, passed in 2003, lowered the top tax rate for the personal income tax and created a credit for capital gains, effectively lowering the capital gains rate. At the time, proponents argued that these changes would spur economic growth in Montana. However, there is no evidence that SB 407 created additional growth in Montana’s economy.
Ending Preferential Treatment of Capital Gains Income
Ending preferential treatment for capital gains income will offer fiscal security for Montana while restoring some of the progressivity of the Montana income tax system. Furthermore, extensive research shows that there is little connection between lower taxes on capital gains and higher economic growth, either in the short run or the long run.
Summary of Recovery and Reinvestment in Montana
The American Recovery and Reinvestment Act of 2009 provides extensive relief to states, local governments, and individuals suffering from the current economic downturn. This brief outlines general principles to consider when allocating the funds, and provides information on the core components of the act with the greatest potential for providing relief to low- and moderate-income Montanans.
Targeted Property Tax Relief
The Montana Department of Revenue is completing the most recent reappraisal of property values in the state. Based on the most current estimates provided by the Department, the appraisals are likely to result in a statewide average increase of approximately 56% in residential home values and 51% in commercial property. The Governor and leadership of both parties have expressed a commitment to keeping property tax revenue neutral as a result of the reappraisals and to mitigate the effects of increased property values on taxpayers. Efforts should be taken to ensure that any proposed property tax mitigation is targeted effectively towards those individuals and families least able to pay increased property taxes, namely those who pay an unduly high share of their income in property taxes.
Investing in Montana's Working Families: A Montana Earned Income Tax Credit
A state Earned Income Tax Credit would help Montana's working families, who are struggling to make ends meet despite their hard work. Economic trends have made it harder for working families to live above the poverty line. Montana currently has over 16,000 families that are working but still live in poverty. The current economic crisis will only increase the struggles for these low-income families. Unfortunately, Montana’s income tax system drives many poor working families deeper into poverty. A state EITC would help ameliorate this effect on low-income taxpayers.