Accountable USA - Montana

Although Montana has never landed a high-profile deal like a foreign-owned auto plant, the state has one of the most expensive corporate tax breaks in the nation. The oil and natural gas tax “holiday,” which has been “on holiday” since 1987, reduced state revenues by $515 million between 2003 and 2007; in 2008 alone, the loss was $140 million.  

Montana, which has no sales tax, relies heavily on income and energy severance (extraction) taxes. However, these are the same taxes the state forfeits under the oil and natural gas tax “holiday,” its research and development tax credit, and its film incentive program. In 2007 the state created property tax incentives for facilities producing renewable energy equipment and for alternative energy production facilities.

Among the few multi-million-dollar subsidy deals in the state: a Wells Fargo operations center and a Cabela’s store, both in Billings (see below).

Our review of four major subsidy programs in the state found two with some online recipient disclosure. The Big Sky Economic Development Trust Fund and the Primary Sector Workforce Training Grant post annual project summaries with the name of the beneficiary, the amount of the grant and the anticipated number of jobs. However, the summaries fail to report actual job outcomes.  

Key Subsidy Programs

Subsidy Program Recent Annual
Cost
Online Recipient
Disclosure
Recipient Disclosure
Score
Job-Creation/
Job-Quality Score**
Monitoring/
Enforcement Score***

Big Sky Economic Development Trust Fund

grants of up to $7,500 per job for companies hiring new employees

$1.4 million (2010)
28/100
60/100
63/100

Oil and Natural Gas Production Tax Exemptions

reduced production tax rates for oil and gas wells meeting certain requirements

$61.9 million (2010)
0/100
0/100
0/100

Primary Sector Workforce Training Grant

grants to businesses of up to $5,000 per employee for training of new and existing full-time workers

$710,000 (2013)
41/100
53/100
59/100

Qualified Research Credit

5% credit against corporate income taxes based on research expenses

$500,000 (2010)
0/100
10/100
28/100

Wood Products Revolving Loan Fund (State)

state-funded revolving loans of up to $2 million

$120,000 (2011)
33/100
not included
not included

* The score is derived from the Good Jobs First report Show Us the Subsidized Jobs (January 2014).

** The score is derived from the Good Jobs First report Money for Something (December 2011).

*** The score is derived from the Good Jobs First report Money-Back Guarantees for Taxpayers (January 2012).

Major Subsidy Deals

Wells Fargo (2001)

When Wells Fargo announced plans in May 2001 to locate an operations center in Billings, company officials insisted that the siting decision was based on low construction costs, competitive wage rates and the area’s “work ethic.” The availability of a $3.6 million state and local tax subsidy package supposedly was not a major factor, though the company did not hesitate to accept the subsidies. The $30 million facility was supposed to create nearly 500 jobs. The attractive wage rates and work ethic were not enough to prevent the company from carrying out layoffs at the loan-processing center in 2007 and 2008. When the mortgage refinancing market boomed in 2009, Wells Fargo hired a slew of new people for the center as temps and later let them go. (Key sources)

Cabela’s (2008)

In 2008, officials in Billings agreed to fund road improvements for an 80,000-square-foot Cabela’s outdoor sporting goods store and its projected 200 jobs by creating a special improvement district (SID) and authorizing the sale of $5.36 million in property tax-backed tax increment financing bonds. The completed store, which opened in 2009, is on 44 acres of former beet fields, where Cabela’s and its partner Foursquare Properties are developing a 400,000-square-foot shopping and hotel complex dubbed Billings Town Square.

Standard & Poor’s refused to rate the bonds because the city’s $4 million reserve fund, which is used to back SID bonds, could too easily be depleted by other land purchases. Billings’ property tax rate is already at its maximum authorized level, and consequently the reserve fund cannot easily be replenished. Selling the unrated bonds increased the interest rate by 1 percent and the brokerage fees by $53,000. Under the repayment terms, the companies split the bond payments with the city on a 40/60 basis. As the land value increases with more development, the incremental property taxes are expected to fully reimburse both the companies and the city. (Key sources)

Walmart in Montana

  • Good Jobs First found no instances of Wal-Mart subsidies in Montana, but given the absence of comprehensive centralized data, it is still possible that deals have quietly occurred.
  • We found no instances of property tax assessment challenges by Wal-Mart in Montana, but given the absence of centralized data, it is still possible that appeals have occurred.
  • Wal-Mart was found to have more workers than any other employer in the state relying on publicly-funded health insurance. This shows how taxpayers end up subsidizing Wal-Mart’s policy of providing low wages and inadequate benefits.

For more information, see the Montana page of Wal-Mart Subsidy Watch.