The Billings-initiated effort to create a new economic development tool for Montana may finally be introduced this week in Helena where the path to passage will be steep and uncertain.
The "whereas" clauses of the draft economic development bill are urgent:
- Montana is challenged to attract and retain the workforce of the future.
- There is an imbalance in tax base and the fiscal demands on the state budget and its taxpayers.
- Montana's future depends on driving private investment as well as building state infrastructure.
The debate over LC1182 will center on the rest of the bill: the mechanics of creating a new state economic development tool to leverage private investment by authorizing state and local governments to reimburse developers for "civic infrastructure projects."
Sen. Roger Webb, R-Billings, has been working on the bill with One Big Sky District proponents since before the 2019 Legislature convened. Sen. Margie MacDonald, D-Billings, will cosponsor it.
Montana's tax structure has been a hindrance to economic development. Local governments, including K-12 schools, are dependent on property taxes and state law forbids them from assessing other taxes. State government relies most heavily on personal income taxes. While most Montanans are happy to be free of general sales tax, state and local tax revenues don't reflect increases in spending driven by economic development. Furthermore, the 2019 legislative majority has opposed new taxes while cutting taxes. It isn't clear how economic development envisioned by LC1182 would create the state tax revenue stream to fund the reimbursement grants.
The latest draft would authorize cities, counties or tribal governments to create "economic impact districts" and to contract with private developers who would build specific "civic infrastructure projects" along with their private projects. These contracts would require the developer to pay upfront for civic infrastructure, such as streets, convention centers or other projects approved by the local government. The local government would commit to reimbursing the developer over 20 years for costs of investing in the civic infrastructure project. That civic project would be tax exempt, and at the end of 20 years, it would belong to the local or tribal government.
Webb's bill also authorizes a state grant program that would match the local or tribal government's reimbursements dollar for dollar up to a limit of $125 million during the course of 20 years.
No reimbursements would be made to the developer until at least $300 million had been invested in civic and private projects approved the the impact district. The Department of Commerce director would be responsible for ascertaining that threshold had be met and for administering any state grants made to the city, county or tribal government that established the impact district. Additional local and state government reimbursements would be available for investment exceeding $300 million.
The Gazette's New Year's Day community agenda for 2019 called on Montana lawmakers to listen to economic development proposals with open minds. Legislators, especially those representing Yellowstone County should be listening now, and asking questions about the bill that Webb and MacDonald plan to introduce. The public deserves a fulsome, open discussion.
Montana cities and counties need new tools to drive economic growth. Will LC1182 create a workable tool? Maybe. But first is has to be introduced and approved by a majority of Montana lawmakers.
Last week, One Big Sky District proponents unveiled a new logo for the statewide legislation -- 406 Impact Districts. This idea certainly has merit, but time is very short to get the word out to all 150 lawmakers. Thinking big is important, so is thinking smart.