It's Time to Transition

By Ken Toole, President, The Policy Institute

It’s time Montana makes a transition away from coal power. Our existing coal plants are aging. In the next five to 10 years we face some decisions about what path we will take to the future. Refurbishing old plants is an expensive and short-term solution. Alternatively, building new coal plants is expensive and risky. Other states facing the same issue are more and more turning away from coal power.
But in Montana coal is king, wielding tremendous power in the political arena. We’ve all heard the arguments the proponents of coal power make. “It’s affordable, it’s reliable, and it’s clean, so let’s use it.”

So what’s not to like?

Let’s start with the idea that coal power is affordable. A report from the Public Service Commission shows Colstrip 4 power has cost us $67.84 per megawatt hour. That is a very high rate. This old plant usually provides us with around 25 percent of our power. A contract with PPL provides about another 25 percent of our power at $52.15 per megawatt hour. PPL’s price includes hydro-power along with coal. It is a safe assumption that PPL’s price averages the two together and that the operational cost of producing hydro-power is much less than burning coal.

Compare those prices with some of the other sources of power here in Montana. The Judith Gap wind farm has delivered power at $46.56 per megawatt hour. This price includes the “integration service” required by wind power and comes around 30 percent lower than Colstrip 4. The cheapest power we get is from energy conservation programs. Conservation costs less than $15 per megawatt hour saved, less than a quarter of the price of Colstrip 4.

So now let’s turn to the reliability arguments of the coal industry. Obviously, the total price is related to how much power is produced. Colstrip generating units 1 and 2 are about 35 years old and Colstrip generating units 3 and 4 are about 25 years old. We know that Colstrip 4 has had significant “outages” since it was brought into our rates and those have contributed to higher costs. Some argue that these outages are unique circumstances. But the fact is that old machines break down and these are old machines. Continuing to rely on these old power plants means the likelihood of outages increases and the need for expensive repairs and retrofits is a certainty. Consumers pay either way.

Then, of course, there is the pollution problem. Coal plants emit toxins which cause a variety of maladies from asthma to hair loss. They use massive amounts of water and they produce a poisonous sludge which must be controlled and processed. The coal mines which feed the Colstrip plants affect the ground water and disturb the landscape requiring large expenditures on reclamation. And there is the carbon issue. The evidence continues to mount that our continued reliance on fossil fuels is having profound impacts on the planet. I’ll leave it to history to judge the inaction of politicians and rhetoric of pseudo-scientists who deny the impacts of carbon on our climate.

Meanwhile, the nation’s coal fleet is aging. Utilities across the country are facing decisions. They can spend massive amounts of money refurbishing old plants. They can try to find financing for new coal plants which incorporate unproven and expensive technologies such as carbon sequestration. Or they can begin the gradual transition to a fleet of new power sources that are cleaner, more reliable and much more affordable over the long run. More and more those utilities are starting a transition away from coal toward renewable power sources like wind and solar.

In Montana we do not have a very good record of making wise decisions about our energy path. We’re still suffering from electric deregulation. We often fall for the pitch from hucksters and charlatans. I can just hear it now. “Pssst, hey buddy, I’ve got a real deal on a coal plant for ya. It’s cheap, it’s clean and it will last forever.” In the transmission away from old fossil fuel technology, Montana has a real opportunity to be a leader, but not if we stick with the technology of the past and our political habit of buying a pig in a poke.

Leadership Seminar Series Alumnae Make the News!

Three Leadership Seminar Series Alumnae (yes, that's the feminine plural of alumni!) have made the news in the past few weeks. Check out these articles featuring Kyla Wiens, Erin Switalski, Alexandra Scranton and Carrie LaSeur:

"Running on Empty Tour" comes to Montana | Great Falls Tribune

"Group protests chemicals in children's products outside Baucus' Missoula office" | Missoulian

"Keystone XL pipeline would screw over farmers, threaten aquifer" | grist.org

The Truth About the Power Line Struggle

By Ken Toole
President, The Policy Institute

I’m writing regarding the recent editorial about eminent domain and the struggles over power lines. The editorial made some factual errors that need to be addressed.
First, let’s address the current controversy over siting of two power lines, the Mountain States Intertie and the Montana Alberta Tie line. Each of these lines has its own particular issues which are varied and complex. But the editorial said there was no similar controversy when the power lines from Colstrip were built. That is simply wrong. The Colstrip lines were opposed vociferously. Some of my first political experience was on the “Hold the Line Committee” in the Bitterroot Valley which opposed the Colstrip line crossing the valley and successfully got it moved farther north.

In many ways the fight over the Colstrip line was the same as the struggles we are seeing today. Fights over power lines are very hot and very short lived. Often the opponents have little interest in broader policy issues or being part of any bigger picture. They simply want the line moved. If you move it over the next ridge the room fills with a different set of opponents. But, that does not preclude opponents from making policy and big picture arguments. Nor does that prevent public officials from mistaking the heat of a local power line fight for some kind of sustaining political base.

But the editorial also missed something very important. Traditionally the political alignment around power line projects is developers versus conservationists. That is not the case today. The editorial pointed to a piece written jointly by representatives of the International Brotherhood of Electrical Workers, a labor union that has typically been supportive of big power projects, and the Natural Resources Defense Council, one of the nation’s largest environmental groups. In addition, The Montana Environmental Information Center supported the legislation revising eminent domain laws and the Western Environmental Law Center is actively working on the MSTI proposal to develop a new process for siting with broad public involvement, community education and economic analysis.

Many environmentalists have moved beyond just saying no to new power lines. The reality is that the nation’s reliance on fossil fuels cannot continue. The threats posed by climate change, relying on other countries for our energy supplies and the price volatility resulting from fossil fuel commodity markets have to be addressed. Equally important, our electric infrastructure is aging and, no matter what the fuel source, it needs to be upgraded. And that is going to cost a lot of money. Our money should be spent making investments that move us away from continued dependence on dirty and expensive fossil fuels toward more efficient use of the power we have and development of clean, domestic and renewable sources of power. That means new power lines may have to be built.

The second error is the contention that wind power is more expensive than the alternatives, particularly coal. This is simply not true. The cost of energy we get from the Judith Gap Wind Farm is less than the cost of power you are getting from Colstrip 4. Somehow wind power has become fodder in an ideological struggle in the political arena. Some people simply refuse to see the technological advancement in wind power that has occurred in the last 30 years. Not surprisingly these same folks don’t see the same pattern as solar power is reaching commercial production scale. It is ironic that the same folks who scream about “subsidies” granted to renewable power sit silently as billions of dollars in subsidies, tax loop holes and support programs are handed out to various fossil fuel industries.

The advantages of renewable power development are significant and self evident. Montana could play a role in meeting the increasing demand for renewable power. We should do it on our own terms assuring that the people of the state benefit from any new development. But to those who simply say “no” I just have to ask, how much longer do you want to stay dependent on fossil fuels, and what kind of world are we leaving for our children?

Teresa Veltkamp (1972-2011)

We at The Policy Institute were deeply saddened by the news of the untimely passing of Teresa Veltkamp, a Class of 2010 Alumna of the Leadership Seminar Series. Teresa was a bright light in our program and inspired the January 2011 session which asked the question, "What Does Our 'Perfect America' Look Like?"

During the session, artist Grace Cheung created the piece you see here which includes images of justice, growth, peace and love against a backdrop of interlocking, multi-colored puzzle pieces. Thank you, Teresa, for being one of our puzzle pieces, and for making Montana a better place.

Great Plains Advocate Takes on Keystone XL

Leadership Seminar Series participant (Class of 2011) Carrie LaSeur has written a compelling, well-researched, articulate piece over at grist.com about the effects of the proposed Keystone XL Pipeline. Check it out.

Good Bills Given Little Consideration in 2011 Legislature

By Molly Severtson
Executive Director

Now that the dust has settled from the 2011 Montana Legislature, it is appropriate to look beneath the surface of the session – beyond the headline-grabbing bills: the spear-hunting bill, the nullification bills and the bill that would have ended the Endangered Species Act in Montana – to look at a couple of bills that were really good ideas, but were given little consideration during the session.

One of these bills was Senate Bill 398, introduced by Sen. Christine Kaufmann of Helena, which would have increased the progressivity of Montana’s income tax system by adding a high-income tax bracket to the tax code. As it stands, Montana’s income tax rates are almost flat, with a tiny bit of progressivity at the bottom end, meaning that a family with a taxable income of $14,000 a year pays the same tax rate (6.9%) as a family with a taxable income of $4 million a year. Montana is also one of the only states in the nation which taxes families living in poverty (6% for those with a taxable income of $3,000 a year).

Sen. Kaufmann’s bill would have increased the tax rate on taxable income of $250,000 a year and more to 11%. This change in the tax code would have brought in more than $80 million a year starting in fiscal year 2013.

The idea that progressivity – or ability to pay – is inherently the fairest type of tax system is an idea that goes back millennia, including the Biblical story of the widow’s mite. The idea behind supporting a progressive system is this: For a family making $20,000 a year, it is much harder to give up say 5% of their income – or $1,000 – than it is for a family making $300,000 a year to give up the same percentage of their income because their basic needs – and then some – are already being met. Therefore, it is fair to tax people at an increasing percentage in accordance with their income. The impact of each of the different tax rates on those families will be felt in much the same way, making the system fair.

It is also true that high-income people benefit at a higher level from the social infrastructure supported by a stable tax system, including public safety and public roads. If you own a profitable business on a busy street, you benefit at a higher level from people being able to access your business than someone who simply uses the same road to drive to a modest-paying job. It is to your great benefit that the road be maintained, and so it follows that you should contribute a higher percentage of your income to support it.

These are important issues that should be debated by our representatives in the legislature. But while the spear-hunting bill was passing out of the Fish and Game Committee 7-3 and passing 2nd and 3rd readings in the Senate, passage of SB 398 was never even voted on in the Senate Taxation Committee, let alone debated on the Senate or House Floors.

Another bill worthy of careful consideration was Sen. Mary Caferro’s Senate Bill 360, a bill that would have enacted a refundable, state-level earned income tax credit – or EITC – in Montana. Republican hero President Ronald Reagan is often quoted as touting the federal EITC as, “the best anti-poverty, the best pro-family, the best job-creation measure to come out of Congress.”

As structured in SB 360, a state EITC in Montana would have cost the state about $33 million per year, less than half of what SB 398 would have brought in. In addition, studies have shown that low-income families typically put their EITC right back into the local economy, paying a month’s rent, buying groceries or making a needed car repair.

Initiatives to enact EITCs have often been met with bi-partisan support in other states, and in the 2009 Montana Legislature, an EITC bill passed out of the House of Representatives with Republican support, but in this session, just like SB 398, SB 360 got very little consideration in the Senate Taxation Committee. The bill was tabled on March 12 and died in committee.

Undoubtedly, the topic of tax fairness is complex and should be vigorously debated. Several important principals are related to tax fairness, including the equity of a tax system (whether or not it treats those at the same income levels and different income levels fairly), the simplicity of a tax system (whether or not it allows excessive loopholes and is understandable) and a tax system’s exportability (the extent to which the system taxes out-of-state individuals and businesses which benefit from the state’s infrastructure).

The knee-jerk reaction of many legislators, especially those on the far-right end of the political spectrum, is a continual cry for lower taxes in the name of economic development despite the fact that reliable studies have consistently shown that state tax rates have little effect on business decisions. However, the quality of a state’s infrastructure has been shown to have a large effect on such decisions, and the state’s infrastructure – its roads, its public safety, its educated workforce – are all supported by a strong, stable tax system.

Overall, this legislative session was mostly one of defense for progressive taxation advocates, and the hard work of many people prevented many bad bills from passing. But the time taken to debate the legitimacy of bills Gov. Schweitzer called “frivolous,” “silly,” and “just bad ideas,” took time from serious bills that deserved serious debate and serious consideration including Senate Bills 398 and 360.

Leadership Seminar Series in Indian Country

The Policy Institute will present the Leadership Seminar Series in Indian Country, June 30 and July 1, 2011, at Hearth View Center in Arlee, Montana.

The event, designed specifically for Native American participants, will feature presentations and discussions led by prominent Indian leaders such as Montana Superintendent of Public Instruction Denise Juneau, and will cover topics like Indian voting history and current trends, and bridging the urban/rural divide of Native Americans in Montana.

The event will be presented at no cost to participants and will include one night’s stay (Thursday, June 30) at the Heart View Center in Arlee, dinner on Thursday (June 30) evening and breakfast on Friday (July 1) morning.

If you are interested in attending, please feel free to contact Molly Severtson for more information.

Legislature Didn’t Reflect True Montana Values

By Molly Severtson
Executive Director, The Policy Institute

The 2011 Montana Legislature adjourned more than one month ago, but the memory of the rocky road that was the 62nd session is still fresh in many minds. Those on the progressive end of the political spectrum knew it would be rough going in this Legislature for our values — including economic justice, fair taxation, corporate accountability and environmental responsibility — but I’m not sure anyone could have predicted the assault these values would be under in this Legislature.

During the session, far-right legislators like Rep. Janna Taylor, R-Dayton, and Sen. Bruce Tutvedt, R-Kalispell, said they were intent on “cutting spending,” even when proposals to do so made no logical sense (rejecting federal funds for health and human services), were against the will of the people (cuts to Healthy Montana Kids) and were especially cruel (cuts to personal services for seniors and people with disabilities).

Perhaps worse, these same lawmakers were unwilling to support common-sense proposals that would have increased revenue to the state, such as House Bill 222, sponsored by Rep. Dick Barrett, D-Missoula.

HB 222 would have required withholding of income tax at the time of sale on real estate sales of at least $250,000 — but not if the seller were a Montana resident or business, or if the property were a primary residence.

The bottom line: This legislation would have collected a tax — already on the books — from wealthy out-of-staters who sell their expensive vacation homes in Montana. According to testimony by the Department of Revenue, these sellers are sometimes unaware of their tax obligation to the state, but other times, willfully ignore attempts by the state to collect the tax after the sale has been finalized. Collecting the tax at the time of sale would address both of these scenarios.

According to the bill’s fiscal note, this law would have resulted in an increase in income tax collections of more than $3 million each year. HB 222 wasn’t a “new tax.” It didn’t increase a tax rate. It simply provided increased enforcement of a current law. But the bill died in the House Taxation Committee, tabled under the leadership of committee chairman Rep. Mark Blasdel, R-Somers.

At the same time that conservatives were unwilling to help the Department of Revenue collect millions owed to the state through bills like HB 222, they were willing to give up many more millions by supporting measures like Senate Bill 372, a bill that reduced the business equipment tax in Montana.

SB 372, sponsored by Tutvedt and signed by the governor in May, will reduce revenue to the state by more than $14 million in fiscal years 2013 and 2014, and even more in subsequent years. Who are the biggest beneficiaries of the legislation? Conservatives would like you to think that small businesses in Montana will benefit most from this legislation. However, since the first $20,000 worth of business equipment is already exempt from taxation, it’s actually larger businesses that will benefit most. In fact, the largest beneficiaries of the bill will be multinational corporations doing business in Montana, like ExxonMobile and Conoco Phillips. And with big oil companies once again seeing record profits, this is hardly the time to offer them a tax break.

The tide seems to be turning in a progressive direction over the past few months. The push-back against an attack on collective bargaining rights in Wisconsin included tens of thousands of protesters in and around Madison, and the recent election of Democrat Kathy Hochul in a traditionally conservative district of New York state seems to bode well for progressives in 2012.

Like most Wisconsinites and New Yorkers, most Montanans aren’t interested in extreme far-right ideas. They know that the social progress gained in the not-so-distant past must be protected today. Montana values include helping out a neighbor when times are tough and coming together as a community to make every citizen’s quality of life better. As Rep. Jon Sesso, D-Butte, said during the session, “A friend’s good fortune is a blessing,” and Paul Wellstone put it this way: “We all do better when we all do better.”

Oil and gas tax incentives not needed

By Julia Haggerty and Mark Haggerty, Headwaters Economics, Bozeman
Originally posted as a guest column in The Missoulian
Posted on On Your Left with the permission of the authors

The Obama administration has proposed eliminating several federal tax breaks for the oil and natural gas industry. This raises an important question: Do tax incentives influence oil production? At a time of both record budget deficits and energy industry profits, both Montana and the federal government should look to the experience of other states for answers.

Many states are especially reliant on revenue from oil and natural gas. According the U.S. Census of Governments, severance taxes accounted for 74 percent of all state tax revenue in Alaska, 34 percent in Wyoming, and 9 percent in Louisiana in 2010. This reliance encourages close attention by states to the assessment of the effects of rates and incentives.

It is no accident that Alaska and Wyoming, the states most dependent on revenue from oil and natural gas, also have the highest tax rates on these fossil fuels. Each has learned that tax rates have a very small effect on production. In other words, rates do not change drilling rates or total production.

In the late 1990s, Wyoming's legislature passed a 2 percent tax break on production, hoping to induce more exploration and drilling. At the same time, it funded the University of Wyoming to study how these tax incentives would affect oil production.
Two years later, the Legislature rescinded the tax break. Oil and natural gas prices had begun a decadelong rise and fossil fuel resources were again flowing from Wyoming. High prices eliminated the need for incentives, and the state badly needed revenue.

The University of Wyoming research confirmed what the past two years showed: lower severance taxes could not, to any great extent, induce the industry to drill more; only higher prices could. The study also noted that higher taxes do not reduce production when prices are high.

For example, during the last decade natural gas production in Wyoming grew significantly faster than in Colorado, but Wyoming's effective tax rate was nearly three times higher (16 percent) than was Colorado's (less than 6 percent) in 2008.
Rather than taxes, fossil fuel production responds to opportunities determined by geology, price, and technology. Some industries, like textiles or automakers, can choose where they want to locate and can take their factory with them across state and national borders. The oil and natural gas industry does not have that luxury. Companies must drill where resources exist, and when price and technology support development.

In the Rockies, high natural gas prices in the mid-2000s supported the use of emerging technologies - seismic 3D imaging, horizontal drilling, and multi-stage fracking - to unlock previously unrecoverable resources and a natural gas boom followed. Now that oil prices are high and natural gas prices low, the same technologies are behind booming oil production in North Dakota and eastern Colorado.
As an example of a tax policy that accounts for the key drivers of energy production, Alaska provides incentives for exploration and technology to encourage the full development of resources, while calibrating production taxes to maximize revenue when prices are high. Production taxes begin at 25 percent and increase by 0.4 percent for every dollar the price of a barrel exceeds $30, and can reach as high as 70 percent.

Montana and the federal government should learn from these states. First, eliminating existing tax incentives will not noticeably affect production. Second, with high oil prices providing industry every incentive to drill, the time is right to eliminate these tax breaks, and to revisit oil and natural gas tax policy to learn what works and what does not to create jobs, encourage production, and provide a fair return to the treasury.

Let's Try Civility

By Pat Williams
The Policy Institute Leadership Seminar Series Convener

The Missoula City Club recently hosted Congressman Dennis Rehberg at one of our monthly public lunches. Congressman Rehberg was introduced by the president of City Club Board. As Dennis approached the podium, I arose from my chair, walked across the room and greeted him, the two of us, alone at the front of the room. We shook hands and exchanged a few words of friendship. I returned to my table, and Dennis began his presentation.

When the lunch had ended and I was leaving, a fellow stopped me and said, “Hello, Pat. I’m a Republican and I was surprised to see you walk up to Rehberg and shake his hand.” During the several weeks since that lunch, I have heard the same response from several others, “Are you and Rehberg friends?”

Twenty years ago, and for decades preceding that, such a greeting between members of Congress was commonplace. Party affiliation aside, members once respected each other and many were fast friends. The fact that some people attending that lunch seemed in a mild state of disbelief as they watched this former member of Congress, a Democrat, greeting the current congressman, a Republican, probably reflects more about today’s public mood than it does about their congressmen.

During the last half of my 18 years in the U.S. Congress, I recognized a significant change among many of my constituents in Montana. They were becoming very partisan, and it was reflected in their letters to me and also to the newspapers. Disagreements within and among those attending public meetings in Montana became common. Radio talk shows became forums for contention. A public rudeness was evident, not only in Montana but in other states as confirmed by my congressional colleagues from across the country.

It became evident — constituents had become more partisan than were their representatives. Many of my own constituents in Montana were far angrier and less willing to find compromise than was either I or my Republican colleague at the time, Congressman Ron Marlenee. Other representatives from across the country, both Republicans and Democrats, also began to notice the sudden ideological hardening of their constituents. Shortly thereafter members of Congress themselves began to reflect the mood of their voters and the effect was increased partisanship.

Soon, congressional Republicans and Democrats were at each other’s throats. A Speaker of the House, Jim Wright of Texas, was forced to resign by the crush of relatively minor charges of misbehavior. The person who chased him out, Congressman Newt Gingrich, was soon scandalized by both Democrats and Republicans and he too was forced from Congress. During the past two decades anger, retribution and — at times — ideological extremism have become almost commonplace. As with the games of ancient Rome, the feeding of the lions has only made the crowds scream for more.

In both the Montana Legislature and the U.S. Congress we have witnessed the election of candidates who in times past would have been roundly defeated at the polls because of their publically expressed extremism. The just completed Montana Legislature comprised many such people. Moderate members of that legislature, both Democrats and Republicans, agree with this; ask them, I have and find that people from both parties are appalled by the quirky actions of the recent Montana Legislature.

The question, of course, is who elected those people. Why, we did — you did; the angry voters did it. It is indisputable that most of those election victories were on the far right and reflect the anger and conspiratorial fears of those folks. However, none of us are immune from the political cancer that has invaded the body politic. We all must look in the mirror and accept our own responsibility — be it staying home on election day or writing nasty letters to the editor or making angry calls to talk radio. Let’s return to civility, respect and friendship.

Pat Williams served nine terms as a U.S. Representative from Montana. After his retirement, he returned to Montana and is teaching at The University of Montana.

Montana Climate Scientist Warns of Falling for "Happy Science"

By Eric Grimsrud
Retired MSU Professor and Climate Change Expert

Citizens of Montana are being misinformed on the single most important detail concerning the effects of our increasing levels of carbon dioxide on the Earth’s temperature.

I am referring to what is called the “sensitivity” of CO2, which is defined to be the temperature increase caused by a doubling of the CO2 concentration in the atmosphere. Direct measurements of temperature and CO2 levels over the past 700,000 years — as revealed by the ice core records of Antarctica and Greenland — show that the total sensitivity of CO2 is about 6.5 degrees Celsius. About half of this has been attributed to “fast” feedback effects (changes in water vapor and clouds) that become apparent in a few decades and the other half is due to subsequent “slow” feedback effects (such changes in the sheet ice of Greenland and Antarctica) that show up over the course of a few centuries. All of this is thoroughly explained in “Target Atmospheric CO2” in The Open Atmospheric Science Journal, 2008, volume 2, pages 217-231.

Magnitude of change

The most recent ploy of the professional deniers of CO2’s effects is to acknowledge that increased CO2 will cause an increase in temperature, but then claim that the magnitude of this effect will be too small to be of importance. An excellent example of this national effort is being provided in Montana by H. Leighton Steward who presents himself as a scientific expert on the subject of climate change. He is the director of EOG, a gas and oil company formerly known as Enron. He is also the spokesperson for a fossil fuel advocacy group called Plants Need CO2, whose advertisements have been shown frequently throughout Montana.

Steward assures us that the Earth’s temperature can increase by no more than 0.2 degrees Celsius — even if we let carbon dioxide levels increase without constraints during the rest of this century and into the next. Thus, he is claiming that the sensitivity of CO2 will always be less than 0.2 degrees C, far less than the measured magnitudes referred to above.

He bases his comforting prediction entirely on century-old, oversimplistic theory that is contradicted by modern physical principles and direct observations. His model is of no relevance to the real world because it accounts only for the absorption of infrared radiation by the greenhouse gases and does not also include the emission of this radiation by these same molecules. While this deficiency in Steward’s model becomes apparent upon inspection of any basic textbook on the subject, it is also revealed in the layperson-friendly article “Understanding Atmospheric Radiation and the Greenhouse Effect — Parts Two and Three” available on the web at www.scienceofdoom.com.

Disconnected from reality

In fact, the emission of infrared radiation in all directions by the greenhouse gases of the atmosphere is just as important as their absorption. That is why Steward’s predictions of CO2’s sensitivity are far too low and entirely disconnected from reality. In addition, the more correct model shows that the temperature effects of increased CO2 levels will continue almost endlessly into future decades and centuries — while Steward tells us that CO2’s effect is already “saturated” and, therefore, future generations need not be concerned about future increases in CO2.

Unfortunately, Steward’s lethal message appears to have been well-received and additionally amplified by powerful fossil fuel interests in Montana. I have tried to create a line of communication with both the Montana Petroleum Association and Steward in an effort to correct this critically important detail of future warming — without success. Therefore, I am sharing my own thoughts here directly with the citizens of Billings. Please beware of so-called “scientific experts” bearing tales of “happy science” that attempt to take CO2 emissions off the hook in our efforts to address climate change. While such presentations might be driven by legitimate and understandable financial concerns, they are also in direct opposition to the laws of Mother Nature and have a very high probability of leading to environmental catastrophes in the coming decades and centuries.

Eric Grimsrud, emeritus chemistry professor at Montana State University in Bozeman, lives near Kalispell. His website is www.ericgrimsrud.com.

Paying Our Fair Share

By Sen. Christine Kaufmann
The Policy Institute Board Vice-President and State Senator, District 41

Originally printed in the Helena IR April 14, 2011

In the next few days I will join with thousands of Montanans to make an investment in the common good. By pooling our resources we’ll increase opportunity for all Montanans and provide a strong foundation for our economy. That’s right, we’ll pay our taxes and we’ll get all those things that make our communities stronger and promote the kind of shared prosperity that our state depends on.

We get safe communities. I certainly could not pay for police and fire protection, clean air and water, a public health system to protect me from communicable diseases, a criminal justice system, or disaster services — all on my own. So I’m happy to join with my neighbors through government to ensure those services are there for all of us.

We get functioning communities. We are assured the children in our neighborhood are learning academic and life skills in the free public education system to help them participate productively in the social, economic and cultural life of the community. The financial systems function behind the scenes to allow for the creation of wealth. Social safety-net programs are there for our neighbors and for us when the economy doesn’t work equally well for all of us. We are all safer when our neighbors are secure. I could never pay for this on my own.

We get livable communities. They grow in a more or less orderly manner. Streets, sidewalks and trails seem designed to provide a way to get where we want to go. The infrastructure delivers water, heat and electricity and carries away garbage and human waste. There’s a thriving arts community and ready recreational opportunities. It doesn’t happen by accident. It happens when government teams up with the private sector to make it happen.

We all get safe, functioning and livable rural and urban communities. But who should pay for them? That is a central question in a democracy. The foundation of progressive policy is fair taxation. It is a necessary good. Those who benefit from public investment must contribute to it. Those who benefit more and have greater resources should contribute more.
It’s not fair that low wage earners have the same tax rate as the wealthiest in our community. It’s not fair that the oil and gas industry gets a tax “holiday” for the first 12 or 18 months of drilling when they are making huge profits extracting a nonrenewable resource. It’s not fair that owners of mansions pay the same property tax rates as their neighbors who are forced from their family homes by increased property values.

I introduced bills this session that would have addressed these inequities. Such policies are not popular — in either party. Politicians take polls and ask people and businesses if they like paying taxes and want to pay more. Not surprisingly, most of them say “no.”

It’s easier to pledge “no new taxes” than to start a conversation about safe, functioning and livable communities or how to make the tax system more balanced and fair. We can’t even pass bills to close tax loopholes in the system we have. The fact is taxes should be raised for some of us. The costs to support community structures and services we expect go up just like everything else. Without a system of fair and adequate taxation, everything collapses. We may not enjoy paying taxes, but if we love our state and our country, we should at least acknowledge it’s an investment worth making. Our lives depends on it.

Sen. Christine Kaufman’s district includes much of the west side of Helena and the Helena Valley.

Rich vs. Poor

By Ken Toole
President, The Policy Institute

The person who defines the question we ask defines the answer we get. In the Legislature the question is, what services must we cut?

But, the real problem is that more and more money is being concentrated in fewer and fewer hands. And those individuals are contributing less and less to the cost of public services.

This problem has been building across Republican and Democratic administrations for the last 30 years.

The super rich in our society want us to continue focusing on the deficit and Social Security at the national level and cutting school funding and human services locally. It keeps us from asking what we ought to expect from them as fellow citizens.

Just who are these "super rich" people? The top 1 percent of families in America control 34.6 percent of all the wealth in the country. The next 9 percent control another 38.5 percent. That leaves 90 percent of us with just 26.9 percent of all the wealth in the country.

For those individuals in the top one-hundredth of one percent, the average annual income is over $27 million per year. The bottom 90 percent of us earn a little over $31,000 per year. We have not seen this kind of "wealth disparity" since the turn of the century when the Robber Barons ruled the country. Guess what? They're back.

Though we have a two-party system, it really doesn't offer much of a choice. Historically, the two parties were different. The Democrats were the party of "Big Labor" and the Republicans were the party of "Big Business."

And these two interest groups had very different political agendas. But, as organized labor began to decline through the 1970s and 1980s, Democratic politicians turned to big corporations for financial support. And, of course, this began to effect how Democrats vote. Today, there is little partisan disagreement on the big three traditional themes of Big Business; privatize, deregulate and cut taxes.

As a result, taxes on the very wealthiest Americans have been reduced through both Republican and Democratic administrations. The top income tax rate levied on the wealthiest Americans dropped from 66.4 percent in 1945 to 32.4 percent in 2010.

We have deregulated everything from banks to electricity to home mortgages. We have privatized public services from custodians to prisons, enabling corporate interests to generate profits in these "new markets".

All of this has encouraged wealth to concentrate in fewer and fewer hands while the middle class has dramatically lost financial ground.

Here in Montana we are not insulated from the national trend. In 1999 the Legislature cut the rate on business equipment in half. While the measure helped some small businesses, the lion's share of the tax cuts went to the very largest corporations in Montana, among them the most profitable oil companies in the world.

In the middle of a budget crisis in 2003 the Montana Legislature cut both the income tax rate on the wealthiest Montanans and the capital gains tax levied on those fortunate enough to have income from an investment portfolio.

The non-partisan Montana Budget and Policy Center reports that just two years later over half of the money from the income tax rate cuts alone went to families earning over $500,000 per year.

These cuts, among others, have helped to shift the cost of paying for public services to Montanans who work for a paycheck. But, we are not hearing about that in this legislature. In between the goofy bills about guns and succession from the Union, all we hear about is the need for more and more cuts to services.

Almost no one dares propose increasing taxes on the wealthy or big corporations. Instead all we hear about is cutting services and who gets hurt. Imagine how different this debate would be if the question was, how do we make sure everyone is paying their fair share?

End of Session Update

Thanks so much to the Partnership for Montana's Future for providing this end-of-session update, and for all your hard work during this tumultuous session.

Federal Funds
Virtually all federal funds have been restored to health and human services. Although the federal funds were not designated in the amendatory veto, enough was added back to fully restore federal funding for Supplemental Nutrition Assistance, Low-Income Energy Assistance, and Title X Family Planning.

DPHHS
• The current budget restored $123 million to DPHHS, brining the current total to roughly $23 million below the governor’s proposed budget.
• Cuts to Healthy Montana Kids, Big Sky Rx, and personal services for seniors and people with disabilities were fully restored.
• Tobacco use prevention, which was eliminated entirely in the Legislature’s original budget, was restored to $9.4 million for the biennium, reflecting $7 million in cuts from the governor’s originally proposed budget.
• Although federal funding for family planning was restored, state funding appears to still be eliminated in the final budget.

K-12
Base aid funding for K-12 public schools throughout the state was cut by $5 million compared to the governor’s proposed budget. We are awaiting additional information regarding other potential cuts in K-12. The result will likely be laid off teachers and staff, larger classrooms, compromised quality, and larger local property taxes.

Higher Education
The final budget negotiated by the governor restored $15.5 million in funding to higher education in Montana. The higher education budget is still approximately $15 million under the governor’s originally proposed spending levels. Tuition increases may be necessary to make up for the cut in state funding, putting higher education further out of reach for Montana families.

Pay Plan
The Legislature cut a $21 million pay plan for public employees that do the work that keep our communities safe, healthy, and educated all across the state. This is the first time in history that the Legislature has rejected a proposed pay plan that the unions and the governor bargained as the law directs. By fiscal year 2013, base salaries for state employees will have been frozen for five calendar years. Additionally, the legislative rejection of the bargained pay plan could jeopardize all future pre-session negotiations.

Cuts Were Unnecessary
Although we should take a moment to appreciate our successes in fighting back the worst of the cuts to the public programs that help make our communities safe, healthy, and educated, we must also remember that the remaining cuts were as unnecessary as they are damaging.
• The Legislature could have passed any number of sensible bills that would have increased state revenues by closing tax loopholes and making sure that all taxpayers are paying what they owe under our current tax laws. Instead, they rejected every such proposal presented, including a bill to make sure out-of-state taxpayers pay the taxes they owe when they sell vacation homes in Montana and a bill that would limit the use of foreign tax shelters by multi-national corporations.
• Instead, they chose to give $16 million away in the form of a business equipment tax cut, with the largest benefits going to multinational corporations like Exxon Mobile and Conoco Phillips. THERE’S STILL TIME TO CALL THE GOVERNOR (444-3111) AND ASK HIM TO VETO SB372.
• The Legislature also refused to acknowledge and budget for an extra $27 million that their nonpartisan legislative staff anticipate will be coming into the state over the next two years.

No Fooling with our Future Rally

Come to the capitol this Friday, April 1, 2011, to protest the deep cuts that are being made in the Montana Legislature to social services, education, public safety and more.

More on Hypocrisy

Last week, The Policy Institute released a report titled, “Profiles in Hypocrisy: Montana Legislators Assail Government Spending While Benefitting from Farm Subsidy Programs.” The report identifies thirty-three current Montana legislators who benefitted from farm subsidy programs from 1995-2009, sixteen of them to the tune of more than $100,000 each, and one, Rep. Janna Taylor (R-Dayton), by more than $1 million.

At the same time that these legislators are receiving regular farm subsidy payments from the U.S. Department of Agriculture, many of them are complaining loudly that the government is “out of control,” and are gutting important programs that benefit Montana’s most vulnerable citizens. This is hypocrisy at its worst.

When questioned by a reporter on the issue, two of the biggest beneficiaries – Rep. Taylor and Sen. Bruce Tutvedt (R-Kalispell) – responded by defending farm subsidy programs. That’s not the point. The point is the hypocrisy of the legislators who take large subsidy payments from the government while repeatedly attacking government programs and government in general in the halls of the legislature.

The public should know about legislators who cut the benefits of just about everyone else – from the elderly (Big Sky RX), to kids from single-parent homes (Big Brothers Big Sisters), to low-income children (Healthy Montana Kids), to those struggling with addiction (tobacco prevention programs) – while silently accepting the largess of the federal government to support their own business interests.

And let’s be honest, if many of these legislators really got what they say they want – drastically smaller government and the exclusion of the federal government in state matters – the programs they depend on for the survival of their farms and ranches would be gone. They might even find themselves needing the very programs they despise so much.

But you don’t hear much about farm subsidies in the halls of the Montana Legislature. Perhaps that’s because of the highly partisan dynamic of the current legislature and the fact that more than ninety-eight percent of all of the farm subsidy payments received by members of the legislature went to Republicans. These are members of the same “conservative” majority that promises to bring government “under control.” These legislators are either blinded by their own political posturing or they are so arrogant they just don’t care.

“(These) federal subsidies are necessary in order to ensure an affordable and abundant food supply,” Sen. Tutvedt said in response to the “Profiles in Hypocrisy” report. While that may be true, it’s also true that many children in Montana need the Children’s Health Insurance Program (CHIP) so they can go to the doctor when they’re sick. Low-income seniors need the Big Sky RX program to get the prescriptions they need. And kids trapped in abusive and violent home situations need child protective workers to protect them.

It’s really all a matter of values. Of course we all value an affordable and abundant food supply, but is that the end of the good that government can do in our communities? No. Beyond building our roads and keeping our food prices stable, government can and does do many other good things for our communities. And when it does, we all benefit with healthier children, safer streets, an educated workforce, a cleaner environment and in so many other ways.

Let’s not forget that – like it or not – we are all in this together. And let’s be realistic about how the world really operates. The idea is that we all put into the system, and we all benefit from it. Let’s not selectively remember when we put in, and forget when we take out.

Profiles in Hypocrisy Report Just Released

Common themes are emanating from the Montana Legislature this session: Government is bad. Government programs are bad. Spending money on government programs is bad. The worst level of government? The federal government. Federal mandates are bad. Federal regulations are bad. Federal safety laws are bad. Even federal money is bad.

But wait, maybe not all federal money is bad. Some of the same legislators who rail against government in general, the federal government in particular and all the evils contained therein, have benefitted from large amounts of money to their farm and ranch operations through federal farm subsidy programs over the years.

These payments come in the form of Conservation Subsidies, Disaster Subsidies and Commodity Subsidies for agricultural products like wheat, barley and canola. And many of these payments are quite large. Sixteen Montana legislators benefitted from payments to their operations in excess of $100,000.00 over the time period highlighted in this report (1995-2009), with one House member’s operation bringing in more than one million dollars.

This report looks at all of the currently-serving legislators who benefitted from farm subsidy programs from 1995-2009, noting the top beneficiaries juxtaposed against their expressed views on governmental programs in general. It is important to note that this report is not meant as a critique of farm subsidy programs. The point is to show the hypocrisy that exists between the professed ideological viewpoints of some legislators and their personal willingness to benefit from the very types of programs they publicly condemn. Read the rest of the report here.

LGBT Protections Debated at the Capitol

Two bills were heard in the House Judiciary Committee last Friday related to protections of LGBT (Lesbian, Gay, Bisexual, Transgender) Montanans. More than 50 people turned out - from locations across the state - to testify in favor of House Bill 514 and in opposition to House Bill 516.

HB 514 would add protection of LGBT Montanans to the Montana Human Rights Act and HB 516 would limit local ordinances to protect classes of people in Montana from discrimination - including those who are LBGT - specifically repealing the non-discrimination ordinance passed in Missoula last spring.

Committee chairman Rep. Ken Peterson (R-Billings) limited the testimony on the bills to 10 minutes each for proponents and opponents. After testimony was closed by Rep. Peterson, supporters of LGBT protection moved to the Jeanette Rankin statue and presented the testimony they wanted to give to the committee. Sen. Carol Williams (D-Missoula) and Sen. Shannon Augare (D-Browning) joined the group to voice their support of protection of LGBT Montanans.

It was quite disheartening to hear the hate coming from those opposing LGBT protections, including Hamilton pastor Harris Himes, who stated that he wanted to have the right to refuse to rent to an LGBT Montanan for "religious reasons." When questioned by Rep. Ellie Hill (D-Missoula) about these reasons, Rev. Himes stated that God's punishment for being gay is that a person shall, "surely be put to death."

Rep. Wagner on Anderson Cooper

Rep. Bob Wagner (R-Harrison) appears on CNN's AC360 and is questioned by Anderson Cooper regarding Montana's "birther bill." Cooper's reaction to Rep. Wagner's reasoning and arguments point out how extreme the views that produce a bill like this really are.

More on Bad Bills

Check out George Ochenski's analysis.

The Terrible Ten

The Democratic Leadership in the 2011 Legislature has released a list of bills they are calling "The Terrible Ten."

From their press release:

HB 392—James Knox (R-Billings) wants to redefine the 14th amendment of the U.S. Constitution by requiring certain individuals born in our nation to apply for citizenship. One legislator’s attempt to make himself a U.S. Supreme Court justice, HB 392 could rewrite nearly 150 years of judicial precedent and discriminate against Native Americans and children of immigrants.

HB 382—Derek Skees’ (R-Whitefish) 1861 flashback would let a handful of legislators nullify any federal law passed since the signing of the Constitution. Slavery, child labor, and universal voting rights could all be up for debate again.

HB 283—Liz Bangerter (R-Helena) would allow sex discrimination in insurance coverage–discrimination the Montana Constitution explicitly forbids.

SB 106—Jason Priest (R-Red Lodge) overreaches legislative responsibility when he attempts to force duly elected statewide officials to do his bidding by joining the national lawsuit against Healthcare Reform. SB 106 is not just a clear violation of the separation of powers, but a clear statement that every Montanan does not need or deserve health care.

SB 114—Greg Hinkle (R-Trout Creek) would like to give each county sheriff authority over national security investigations. SB 114 would leave anti-terrorism efforts up to dozens of uncoordinated sheriffs, a favorite of extremist groups across the country.

HB 284—Tom Burnett (R-Bozeman) wants to criminalize state employees for complying with federal law.

SB 161—Verdell Jackson (R-Kalispell) wants to invalidate laws prohibiting insurance company abuses. In addition, he too would like to criminalize state employees.

HB 321—Krayton Kerns (R-Laurel) would end the Endangered Species Act in Montana, putting critical wildlife and habitats at risk. He would like to wipe out the law, along with rare species.

HB 397—James Knox (R-Billings) wants to give funds to unaccredited learning institutions, instead of fulfilling the state’s constitutional obligation to provide every child with a quality education.

SB 125—Art Wittich (R-Bozeman) would prohibit Montana from complying with federal health care reform, violating the Supremacy and Commerce Clauses of the U.S. Constitution.

Update: I agree with Intelligent Discontent that these ten bills are but a taste of the craziness going on at the legislature this year. Check out Pogie's Terrifically Stupid Twenty.

In Their Own Words

The Policy Institute has set up a page on our main website highlighting video coverage of legislators and others testifying before the 2011 Montana Legislature.

The page includes links to Rep. Champ Edmunds (R-Missoula) describing a hypothetical voter fraud scheme that could ostensibly take place on the UM campus, Rep. Janna Taylor's (R-Dayton) controversial statement regarding HIV-positive prisoners in Montana and Sen. Anders Blewett (D-Great Falls) challenging Sen. Jason Priest (R-Red Lodge) on his use of the term "Obamacare" to describe the Patient Protection and Affordable Care Act.

There are a lot of Far Right - and just plain nutty - ideas and bills floating around at the legislature this session. This is but a taste.

Tax Compliance for Out-of-Staters: A No-Brainer

By Molly Severtson
Interim Director
The Policy Institute

This morning The Policy Institute testified at the House Taxation Committee in support of House Bill 222 sponsored by Rep. Dick Barrett (D-Missoula). The bill would create the "Montana Real Estate Backup Withholding Act," which would help bring into tax compliance out-of-staters who sell property in Montana. Currently 36% of non-residents who should be paying this tax are paying it, while just 4% of Montanans who owe it are not compliant. The bottom line? There is no reason for the legislature to not pass this bill.

The Policy Institute believes that people who buy and sell land in Montana benefit from our social infrastructure and therefore have a responsibility to help maintain it.

With education, health and human services and other public service budgets being slashed this session, it would be irresponsible for the legislature to let this non-compliance by non-residents continue to happen.

UPDATE: A Billings Gazette story on the hearing.

SB 104 - A Bad Idea for Energy-Efficiency and for Montana

By Molly Severtson
Interim Director
The Policy Institute

Tomorrow, January 13, 2011, the Senate Energy and Telecommunications Committee will consider Senate Bill 104, sponsored by Sen. Jason Priest (R-Red Lodge). The bill would limit the Public Service Commission's ability to implement inverted block rate structures for electrical services. I will be there to testify before the committee in favor generally of inverted block rate structures as a concept, and specifically in opposition to Senate Bill 104.

Inverted block rate structures are cost structures in which each additional block or unit of energy above a given level is charged at a higher rate than preceding blocks. In short, the less energy you use, the less per unit you pay for that energy. Inversely, the more energy you use, the more per unit you pay for that energy.

As Montana moves forward into an uncertain energy future, it’s important to remember that energy conservation is the lowest-cost energy to which we have access. Inverted block rates create both an incentive and a reward for all consumers for reducing energy usage. In addition, increased conservation means less need to purchase power in the market or to build new power plants in the future, benefitting consumers in the long term.

Republicans are expected to argue that inverted block rate structures will disproportionately affect low-income Montanans, as their homes are often older and less energy-efficient, and they're less able to make energy-efficiency upgrades to their houses or apartments. Saying nothing of the hypocrisy of this position as Republicans just made more than 250 budgetary cuts (many of them in the social services arena) in a procedural trick, it is important to remember that Northwestern Energy’s inverted block rate structure is of benefit to 75-80% of their residential customers. Also, for every low-income household this affects negatively, there are many more high-end “McMansions” in Montana that will be affected. In addition, energy assistance programs will still be available to low-income folks who are negatively affected by the structure.

Finally, and perhaps more to the point, rate-making is an extremely complex arena and is something in which the legislature should not even be involved.

For these reasons, The Policy Institute opposes SB104. I urge you to do the same by attending the hearing, or contacting the legislators on the Senate Energy and Telecommunications Committee.

UPDATE: A Missoulian story on the hearing.

Part of the Message from Employers to Lawmakers: Government Can and Should Do Good

By Molly Severtson
Interim Director
The Policy Institute

I'm guessing that the Jobs Listening Session, held Saturday at the Montana Legislature, didn't turn out exactly as the Republicans who planned it had expected. The session was designed to, according to President of the Senate Sen. Jim Peterson (R-Buffalo),"create an opportunity for private-sector Montana employers to come tell us what we can do to help put Montana back to work."

Speaker of the House Mike Milburn's (R-Cascade) description of the intent of the meeting was more to the point: "We are hoping ...employers... give us ideas of what burdensome laws, regulations or tax policies need to be changed or repealed so that these private employers can create opportunity for unemployed Montanans to rejoin the workforce."

I spent the morning in the session designed for Construction and Energy employers. While many of those who spoke gave the expected responses - "cut the red tape, get government out of our way, etc.," - a surprising number of those who spoke said just the opposite.

Mike Dowling, an architect from Helena, urged lawmakers to keep investing in state-financed building projects, Robert Morrison of the engineering firm Morrison-Maierle highlighted the need for public investment in Montana's infrastructure as an important component of a healthy economy and Matt Warner of WTR Consulting Engineers said that a strong infrastructure is, "key to our quality of life in Montana."

Twitter was lighting up with those surprised and pleased by this turn of events, and while House Majority Leader Rep. Tom MGillvray (R-Billings) tweeted, "Business days at capitol: most common concern was worker comp costs and business equipment tax in group I attended," I hope that he and other Republicans heard the other message as well: Government can and should do good when thinking about job creation in Montana.

Another note: During the planning of the meeting, Senate Minority Leader Sen. Carol Williams (D-Missoula), along with House Minority Leader Rep. Jon Sesso (D-Butte), had to urge their Republican counterparts to include nonprofit organizations in the session. "We just told them it had to be a broad diverse discussion and have nonprofits as well as for-profits to be able to have a voice," said Sen. Williams.

Just one nonprofit representative spoke at the session I attended, Kathy Hadley of National Center for Appropriate Technology (NCAT) in Butte. Perhaps illustrative of a general misunderstanding of nonprofits, NCAT was listed as a "quasi-governmental" organization on the meeting agenda, a point which Ms. Hadley corrected during her testimony.

Procedural Trick Reduces Transparency of the Legislative Process

By Molly Severtson
Interim Director
The Policy Institute

Early next week, Montana legislators will consider a recommendation from the Legislative Finance Committee to start making budget decisions at 5% below the adjusted base budget, meaning that more than 250 cuts to the Governor's budget will be made automatically in a simple procedural decision without public scrutiny. If you care about Montana's families, businesses and vulnerable children, contact your legislators today to urge them to make these important budget decisions in the light of day.

Learn more here.