State Legislature 2020: Kathy Kelker
When I ran for the first time, I was motivated by concerns about children growing up in my North Park/Northern Elevation District. In December 2016, there were 3,396 children in foster care in Montana. Yellowstone County had about 880 children who were found to be neglected. As an adoptive parent and former foster parent, I was alarmed that so many children were being identified as neglected, largely because of parents using drugs. In my second term, I was able to pass a bill requiring the state to form a Child Abuse and Neglect Review Commission. The Review Commission studies what has happened to cause a child to suffer neglect or abuse. It was satisfying to see that this commission could be part of improving child protection.
As I look forward to my fourth term, I have shifted more to economic concerns, particularly the foundations that support a middle income lifestyle. In my district there are families who struggle to pay their bills and that situation has gotten much worse during the pandemic. Many of my constituents are essential workers in healthcare, public safety and basic services. They cannot work at home, and they have struggled to find childcare for their children who were involved in distance learning. Some families did not have the computers and wi-fi necessary to participate in the virtual process.
As I hear from constituents, 1 am motivated to focus on issues that support the middle-class lifestyle. The key ingredients of this lifestyle are having good-paying jobs, owning a home, being able to save for retirement, providing education for children, having health security (insurance), having transportation for adults, and enjoying regular family vacations. Focusing on these foundational areas demands innovation and new thinking at the legislature, and I want to be part of that.
At this moment, economists are predicting a slow, stop-and-go economic recovery from the effects of the pandemic, including permanent losses of some jobs and significant reductions in income extending perhaps into 2022 and beyond. My policy priorities for the recovery include the following:
Safety. Recovery depends on protecting public health. Community recovery requires COVID-19 testing capacity, public compliance with recommendations, and a health care system with the capacity to respond to hotspots of COVID-19. Using confidence-building measures like temperature checking, handwashing stations, self-checkout at stores, plexiglass shields between tables in restaurants will help people to adjust to the new normal.
Communication. The federal government has provided funds for unemployed workers, loans for businesses and funds to cover public health costs. The general public and business owners in particular must have easy access to information about the funds that may be available. Free consultations and sharing of information will continue to be needed.
Quick Job Connections. Existing employment agencies need to connect the newly unemployed quickly with talent-seeking industries.
Skill-up Training. Because of the pandemic, some companies will change their models for doing business. Workers who are unemployed or existing employees who may need new skills will require training.
Buying Locally. Small businesses can survive the pandemic only if consumers make purchases locally.
Innovation. Though it may seem counter-intuitive, during this significant economic slump is a good time to increase investment in entrepreneurship, education, and research.
Partnerships. During economic recovery, coordination of efforts at the local level will be an effective way to assist businesses and support people looking for work.
Legislatures tend to be a reactive and cautious about making long-term commitments. But state government should also be the people’s instrument for shaping their shared future. Montana has one of the oldest populations in the nation. Because of this aging population, Montana is on the edge of dramatic demographic changes that over the next 25 years could undermine our economy and lifestyle.
The number of Montana’s working-aged adults is forecast to fall even as the share of Montanans over age 65 rapidly rises. Because of this loss of skilled workers, the Legislature has a crucial role to play in maximizing workforce training and business productivity and educating the next generation to contribute fully to society. Our success will depend in large part on our willingness to favor long-term gain for the whole state over short-term, self-interested expediency.
In the near term, Montana needs wider avenues for adult retraining and college degree completion, better coordination between higher education and employers through internships and apprenticeships, and more opportunity for high school students to acquire college-level credits or technical certification while in high school.
In addition to workforce education, Montana must upgrade and modernize its infrastructure. We need to consider emerging technologies, and design our future infrastructure with clear economic, social, and environmental benefits in mind. In order to catch up in infrastructure, the Legislature is going to have to look at new sources of revenue.
Nonresident travelers outnumber Montanans 12:1, and we do not currently have a mechanism to collect revenue from these visitors to pay for the additional strain they put on Montana’s infrastructure. A variety of options, including expansion of tax options and increases in user fees must be thoroughly explored and brought to the table to be discussed.
A legislator’s role is not solely as a trustee or a delegate. There are so many issues that come before the legislature that it would be impossible to know the will of constituents on every issue. When considering a bill, I find out as much as I can about the issue and how it might effect stakeholders. For example, vaping was an issue last session. It involved public health professionals, consumers, vaping business owners, parents, and educators. I tried to look at the issue from all those angles. I also read research and considered feedback from constituents. Most of them were against flavored vaping. In this case, the research and my constituents’ responses were similar and I voted accordingly. The welfare of the general public and the opinions of my constituents were the same. That is not always the case. Every issue requires a balancing of understanding the issue, determining the policy effects and deciding what might be the best for the general public.
To learn my constituents’ opinions on various issues, I do a great deal of listening. Constituents tell me about the issues that affect their families and they share their opinions about what they think the Legislature should do. Currently, I am hearing about public safety (use of drugs, dangerous behavior) and healthcare and prescription drug costs. Because these issues are important to my constituents, I’m digging into these topics and researching what other states are doing to solve these problems.
I communicate with my constituents in many ways: in person conversations, letters during and after the sessions, and messages on my website. I post on Facebook and write opinion pieces for the newspapers. My constituents can contact me by mail, email, text and cell phone. I try to respond to every message that I receive.
Bi-partisan solutions and compromise are essential in the legislative process. The Yellowstone County legislative delegation is heavily weighted toward Republicans, 16/9. If all 25 Yellowstone County legislators agree on a bill, the chances of that bill passing are high. In the past, the Yellowstone County delegation agreed to work together on getting a branch of the State Forensic Laboratory based in Billings. I was the secretary of the group at the time. We worked hard on this topic and were successful in passing the bill. Virtually any other topic could be successful if the entire delegation could agree on a particular bill.
In order to get agreement in the delegation, there has to be an overall consensus on what is best for Billings and its surrounding communities. Reaching this level of agreement requires that all members are informed about the priorities of the city and county and why these items are important. As an example, a local option tax has been a high priority with the Billings Chamber and Big Sky EDA, but there were skeptics in the delegation because they were opposed to any new tax or they saw the local option tax as a sale tax.
Because Billings is the largest city in Montana, it has the potential to pass bills. Other cities do a much better job of getting their delegations to work together. If Billings is to be successful in passing legislation, several things need to be in place: 1) both the city and county must be on board, 2) the bills must have local constituents’ support, and 3) Billings must allies in other cities who would promote the legislation. Examples of potential consensus policies might be funding for large school districts, infrastructure projects, career and technical education, workforce training, and public access to public lands.
Montana has no sales taxes and property taxes are below the national average, with an average effective rate of just 0.84%. The state also has a personal income tax with rates ranging from 1% to 6.9%. The chart below shows where Montana ranks compared to other states (The lower the ranking, the higher the tax).
MONTANA’S TAX RANKINGS
- Property Tax: 21
- Sales Tax: 50
- Individual & Corporate Income Tax: 24
- Other Taxes: 9
- Overall: 38
One area of Montana’s tax system I would adjust is how taxes affect households at different income levels. For example, Montana’s families living on low- and middle incomes pay a higher percentage of their income in taxes than high-income households. Those with incomes below $18,000 pay 7.9 percent of their income in state and local taxes, while the top 1 percent (those with income above $448,500) pay 6.5 percent. In 2003, the Legislature made changes to the income tax system, including collapsing the income tax brackets. This change gave a greater tax cut to high-income households, and cost the state nearly a billion dollars in revenue. I think these bracket changes should be reconsidered.
Over the years, the Legislature has reduced the business equipment tax (BET) rate down from a high of 12%. The revenue from the BET results in roughly a 20/80 split between the state general fund and local governments and constitutes around 6.5% of general fund revenue. Reducing BET further is something to consider, but it is not at the top of my list for adjusting taxes.
I have supported local option tax bills in the 64th, 65th and 66th Legislative sessions. My view is that communities should have the opportunity to present infrastructure projects to their citizens and give them the chance to vote up or down on paying for local projects.
Understandably, business owners and workers in Montana are concerned about potential liabilities as businesses open up and employees return to work. One of the biggest concerns is if employees get sick with COVID-19 and claim that they contracted the disease while at work. Fear of costly lawsuits is one more worry when businesses are already grappling with lost income and potential bankruptcy. I support creating a safe-harbor that incentivizes employers to take specific steps to provide employees with protective equipment—such as masks, gowns and gloves—and takes other precautions against infection such as disinfecting workplaces, offering updated sick leave policies, and imposing social-distancing measures for workers and customers or patients. To meet standards of safety, some industries may have to move to alternative methods for providing services. For example, fitness trainers might have to provide training and supervision remotely, physicians might “see” patients via virtual visits, and professors might teach online.
Safe-harbor legislation creates an agreement that if businesses meet or exceed required health safety standards, they would have liability shields for the short-term until a vaccine is discovered, produced and available to all. Both employees and businesses would benefit from these arrangements. Workers would have better protections, safer work conditions, and a legal recourse if their employer acted negligently.
I would consider extending legal presumption with workers’ compensation coverage for traditional first responders and health care workers impacted by COVID-19. But I wouldn’t go so far as to cover all essential workers because that could overwhelm the worker’s compensation system.
In my opinion, the best way to handle temporary needs for liability protection for businesses would be laws originating at the federal level. If the standards for health safety were uniform across the nation, it would lead to equality of treatment of similar cases.
H.B.658 created a six-year extension of Medicaid Expansion along with Medicaid work requirements. Because the new Medicaid Expansion law had work requirements, Montana had to obtain a federal waiver to move forward with implementation. Montana submitted its waiver in August 2019 and is still waiting for the federal response.
Meanwhile, Medicaid Expansion without work requirements continues to be successful. With the federal government paying at least 90% of the costs, Montana pays 10%, instead of about 35% for traditional Medicaid. The state saved money by transferring some Montanans with serious or chronic illness from traditional Medicaid to the expansion program. Because Medicaid expansion pays some health care costs for inmates, state and local governments saw reduced costs for their expenditures. Medicaid expansion pays for inpatient and outpatient mental health care, and the program also covers residential and outpatient addiction treatment.
In terms of economic gains, Medicaid expansion has created more than 5,000 new jobs and pumped $350 million a year into the state economy. About 70% of adults covered by Medicaid expansion are already working. Expansion recipients pay premiums so they contribute to the cost of their care. Having health coverage allows them to stay healthier and keep working. DPHHS tracks preventive services and reports that 1,330 enrollees were newly diagnosed with diabetes and provided with treatment. At least 2,869 enrollees were newly diagnosed with high blood pressure and treated. Both diabetes and hypertension cause a host of severe health problems if not treated early and properly.
Medicaid Expansion is doing what it was designed to do. The work requirements in HB 658 are not necessary and, if implemented, would be expensive to administrate. The bottom line is that Medicaid Expansion is a good deal for Montana as long as the federal contribution remains the same.
Montana like every other state is experiencing significant loss of income and high unemployment due to the COVIC-19 pandemic. As of March, Montana had $291 million ending fund balance at the end of FY 2020, as well as $118 million in the Budget Stabilization Reserve Fund. For the near future, Montana’s ending fund balance and “rainy day” funds will provide some buffer against revenue losses, but it is unclear how long that will last.
Like other states, Montana is benefitting from federal support such as the Families First Corona Virus Response Act and the CARES Act. Montana is receiving $1.25 billion in relief funding that state and local governments can use to respond to COVID-19. This support is welcome because it shores up local businesses and provides basic services.
The estimates now are that Montana’s economy will take at least two years to recover, especially in the areas of retail, tourism, travel and elective healthcare. Looking ahead, the Legislature must prepare for drastically lower tax revenues and greater assistance needs for citizens who are unemployed or suffering from loss of income. The budget priorities must be for the basics–health care, food, housing, financial supports and child care.
Realistically, continuing federal assistance with the Payroll Protection Program will be necessary to help small businesses survive until there is a consensus that the outbreak is over. This funding would also help ensure demand for labor during the recovery period. Additional rounds of stimulus payments would give tenants the means to pay their rents and homeowners their mortgages so that banks don’t have to bear the brunt of income shortfalls. In turn, financial institutions will have the ability to keep lending. Future stimulus relief should also include grants to states to help prevent mass layoffs by local governments and maintain vital services.
The 406 Impact Districts bill would have authorized cities, counties or tribal governments to create economic impact districts where civic infrastructure, such as streets, conventions centers, office buildings, healthcare centers could be built. The financing of the civic projects would come from contracts with private developers who were willing to pay up front for infrastructure. The local government that created the impact district would commit to reimburse the develop over 20 years for costs of investing. The civic project would be tax-exempt. At the end of 20 years, the structure would be owned by the local government.
The purpose of creating 406 Impact Districts was to stimulate economic growth on a larger scale than is currently possible. The state budget does not allow for major grants to improve infrastructure. Because Montana lacks infrastructure for a technology-based economy, the state struggles to attract and retain highly-skilled, tech-savvy employees. Montana’s economic future depends on attracting private investment to assist with growth when the state cannot do that job.
The concept of attracting large sums of private money to invest in Montana’s infrastructure is a new idea and it is somewhat counter-intuitive. In the past, public buildings have always been built using public dollars. The impact districts turn this paradigm upside down. If I were attempting to “sell” this idea to the Montana Legislature, I would work on these things:
- Educating legislators about the relationship between modern public infrastructure and economic growth in areas of technology, medical research, and entrepreneurship;
- Developing a coalition of large and small communities that are interested in creating impact districts;
- Providing examples of long-range plans in Montana communities that would be suited to development through impact districts;
- Convincing legislators that growing a modern economy requires commitment of public/private partnerships over a long period of time.
This is a membership communication paid for by the Billings Chamber of Commerce and provided for the benefit of our members.