New residents aren't taking pay cuts to move to Montana

HELENA (AP) — Montana's population has been growing during the pandemic, and on average, new residents aren't taking pay cuts to move to the state. That means they're either bringing their higher-paying jobs with them or finding similar-paying jobs in the Big Sky state, policymakers were told this week.

Legislative fiscal analyst Sam Schaefer presented the data to a committee that is developing a new model to better estimate Montana tax revenues and spending in the coming years.

A few years ago, the concern for Montana budget makers was how state revenues might decline as aging residents moved into retirement with fewer new workers to replace them.

But in recent years, the state's population has increased with higher-income residents, including wealthy retirees, Schaefer said

"The data doesn't suggest it; this is objectively true," he said Tuesday. "The average federal adjusted gross income levels are bigger for those coming here than for established people."

Prior to the pandemic, Montana's population was growing at a rate of about 0.9% per year. In 2020, the state population grew by 1.1% followed by 1.6% growth in 2021. This year, the population growth is forecast at 1.3%, Schaefer said.

"With these new individuals comes an increasing tax base," Schaefer wrote in his report. If the trends seen in 2019 and 2020 continue, "these new taxpayers will bring incomes typically larger than existing Montana residents, especially for those aged over 65."

On average, new residents who moved to Montana in 2020 earned more than existing Montana residents. In fact, the top 10% of new residents had an average household federal adjusted gross income of nearly $600,000, compared to $312,760 for the top 10% of full-year residents, Schaefer's report said.

Residents new to Madison County in 2020 — home to the exclusive Yellowstone Club — have an average federal adjusted gross income of $768,000, state data shows. Madison County also saw the highest FAGI among new residents who arrived in 2019.

People who became Montana residents in 2019 showed an increased federal adjusted gross income in 2020 compared to the previous year, showing people weren't taking a pay cut to move to Montana.

Legislative auditors will be able to analyze 2021 tax information late this year, Schaefer said.

The top states Montana is drawing new residents from are California, Washington, Colorado, Oregon, Idaho and Texas.