State scores above average

Montana economic development guru Evan Barrett didn’t assign a letter grade to the state’s newly released economic development report card, but based on his presentation in Kalispell on Friday, Montana is heading toward the top of the class.

As head of the Governor’s Office of Economic Development, Barrett has been traveling the state, speaking at sessions hosted by the Montana Ambassadors and groups such as Kalispell-based Montana West Economic Development.

Barrett helped create and retain thousands of jobs and participated in some of the state’s largest industrial recruitment efforts during his 18 years at the helm of economic development in Butte from the late 1980s through 2004.

“Governor Schweitzer’s aggressive economic development efforts have moved Montana into the forefront of economic activity in the nation,” he told local business leaders.

To back that up, Barrett pointed to the most recent state rankings in Business Facilities magazine. Montana ranks eighth in the United States in overall business climate, sixth in best overall tax climate for business, third in best sales tax climate for business, eighth in quality of life, sixth in cost of labor and fourth in most educated work force.

He noted that Forbes magazine rates Montana as the “fastest climber” as the most business-friendly state in the nation, going from 42nd, to 24th, to 13th in the most recent calculation.

As one of only two states (North Dakota is the other) in the black right now, Montana has earned a lot of national media attention from publications such as the New York Times and the Wall Street Journal, which touted a piece on “The Montana Exception.”

In energy development, Barrett said Montana is at the head of the class.

It’s the fastest-growing state in the nation in oil production and second in coal production, which is up 13 percent since 2005. It’s first in wind power growth.

Between Jan. 1, 2005 and Oct. 28, 2008, roughly 60,000 private-sector jobs were created in Montana, and despite a lingering economic downturn, job creation has continued in three of the past four months. Last month 1,489 jobs were created, according to state statisticians.

Despite glowing reports from several different sources, there are those — particularly in an election year — who are “running around saying the sky’s falling,” Barrett acknowledged.

While the Governor’s Office contends there’s $350 million in available cash in the state’s coffers, the Legislative Fiscal Division has predicted a bleak financial picture for the state, figuring it will be $500 million in the hole in the coming year. Barrett disputes that prediction, saying historically the division has underestimated state income by hundreds of millions of dollars.

“The sky is not falling,” he said.

Barrett said Schweitzer has been able to keep Montana financially sound by vetoing unnecessary bills, insisting on a “rainy day” fund and maintaining strong fiscal discipline even when times are good.

Barrett opposes the Legislative Fiscal Division’s recommendations to curb state spending.

The division wants to move the Governor’s Office of Economic Development into the Department of Commerce and fund it with bed-tax revenue. That’s not likely to happen since there are restrictions on how bed tax money can be spent, he said.

Another proposal that irks Barrett is diverting loan repayments made to the wood products revolving loan fund to the state general fund.

“That’s bull. It needs to stay in wood products,” Barrett told the Kalispell audience. “It’s a challenged industry.”

Much to his chagrin, the division also has recommended reducing or eliminating crucial worker training programs, the state’s Energy Promotion and Development Division, the Montana Manufacturing Extension Center and statutory appropriations for economic development that fund programs such as small business development centers and Growth Through Agriculture.

The division’s argument for chopping programs is that success is “nebulous” and difficult to measure.

“These are the kinds of things we don’t want to have done in the Legislature,” Barrett said. “Articulate to your legislators: Don’t do dumb things.”

It’s an exciting time for economic development in Montana, Barrett said.

He noted the new Innovate Montana program that offers a unique Web portal uniting the state’s innovative economies. The private-public partnership between industry and the Governor’s Office of Economic Development will focus on businesses and entrepreneurs who want to invest in Montana.

Also forthcoming is a proposal called Montana SEED (State Economic/Educational Dividend) that would provide a road map for how to use state revenue from the Otter Creek coal mine near Ashland.

In March, the governor and leaders on the state Land Board voted to sign a deal with Arch Coal Inc. Opening the mine could take five to seven years, but the company agreed to pay $86 million up front, plus future royalties, to Montana for the right to mine coal on state lands.

The state estimates $7.4 billion in revenue from royalties and severance taxes over 25 years. The net effect would be $6.2 billion in total state dividends, of which the governor wants $2 billion to go to Montana’s kindergarten to 12th-grade schools; $1 billion for higher-education scholarships; $1 billion for advanced energy research and $2.2 billion for general fund opportunities.

“We want to put a thumbprint now on how to use this money to invest in Montana’s future,” Barrett said. “Coal is a four-letter word to some. It is for us, too — CASH.”

Features editor Lynnette Hintze may be reached at 758-4421 or by e-mail at lhintze@dailyinterlake.com