Billings economic development leaders made compelling arguments for investing in Montana's cities to attract businesses, create new jobs and recruit young workers to Montana. But their well-organized pitch was met with an hour of skeptical questions and varied concerns from members of the Senate Taxation Committee Thursday.
"Senate Bill 340 is economic development on steroids," said Sen. Roger Webb, R-Billings, who is sponsoring the legislation at the request of Billings constituents. On Thursday, Webb told the Taxation Committee, which he chairs: "We're looking to drive strategies that yield private investment."
The hearing room was filled with about 50 people, mostly from Billings. The majority of the 26 who spoke in support of Webb's bill were from Billings, including City Council members Penny Ronning and Richard Clark, Mayor Bill Cole and Assistant City Administrator Kevin Iffland. The board presidents of the Billings Chamber of Commerce and Big Sky Economic Development Authority strongly endorsed the bill as did executives from Billings businesses involved in health care, architecture and lodging. Representatives of chambers of commerce in Missoula and Bozeman added their support as did the mayor of Great Falls, who is president of the Montana League of Cities and Towns.
Speaker after speaker mentioned that their young adult children are working at higher paying jobs out of state. Business leaders said the present workforce shortage is the worst they have seen in their careers, and urged support for this economic development tool as a way to recruit and retain workers in Montana.
Al Ekblad, leader of the Montana AFL-CIO, supported the bill, saying that his national union is willing to invest up to $150 million in Montana projects that would create union jobs and train new union workers in construction trades.
After an hour and a half of proponents' testimony, five opponents testified — four Billings residents and one professional lobbyist representing a Billings business.
Then Republican and Democratic committee members questioned whether the examples of "civic infrastructure" projects listed in the bill are acceptable uses of public funds. Webb responded that the local government would decide what projects to allow.
Another senator asked what control the state or the Legislature would have over projects that the bill envisioned the state reimbursing. Again, Webb said the control would be local.
"I'm genuinely confused about what the public money can be used for and what accountability there is," said Sen. Dick Barrett, D-Missoula.
Proponents said no public funds would be paid until private investment totaled $300 million in a proposed district, and that the investment ratio would be five-to-one private vs. public dollars. Information provided to the committee by SB340 supporters, says that $300 million in private investment, including civic infrastructure and private development, would trigger as much as $75 million in local reimbursement plus as much as $75 million in state grants to the city during 20 years — a 50-50 split of capital costs. If a district generated $1 billion in private investment within 10 years, the city could reimburse as much as $125 million and the state would match it dollar for dollar during the course of 30 years. The capital cost split then would be 87 percent private, 13 percent public, according to the proponents.
The numbers in that handout, as well as numbers in SB340 are drawn from analysis of the Downtown Billings One Big Sky District that has been in planning for the past couple of years. But there was little mention of One Big Sky District at the committee hearing. The proponents talked about "406 impact districts" because SB340 wouldn't be just for Billings, but would allow these economic development incentives to be used anywhere in the state.
Webb assured his committee members that SB340 doesn't indebt the state or bind future legislatures. However, he said that local government's payment obligation would depend on the contract it signed with a developer.
"Why would a developer do a project if the state or local government could back out?" asked Sen. J.P. Pomnichowski, D-Bozeman.
Sen. Russ Tempel, R-Chester, said he was disappointed that the plan involved communities that "aren't having trouble." Why not spread the money around, Tempel asked.
Sen. Bruce Gillespie, R-Ethridge, said economic development should try to enhance natural resource industries. Committee Vice Chair Sen. Brian Hoven, R-Great Falls, agreed with Gillespie, adding concern that the proposal wouldn't create "high-paying, primary sector jobs."
As Webb said, SB340 had a bumpy road to reach the committee. Testimony and senators' questions Thursday indicate that bumps remain in the short time left to win majority legislative support for a new, complex economic development tool. There may be too many questions to answer to lawmakers' satisfaction in this session.