‘Economic transformation’ commission adopts priorities, seeks public input

HELENA — Officials serving on a commission tasked with helping Gov. Greg Gianforte spend $150 million of the state’s COVID-19 relief money to bolster Montana’s post-pandemic economy agreed Wednesday to consider proposals sorted into four buckets: business innovation, value-added agriculture, workforce development and affordable housing.

The Economic Transformation and Stabilization and Workforce Development Advisory Commission also heard from economists and public commenters about how worker, housing and childcare shortages are holding the state back as its economy rebounds from the pandemic recession. It plans to meet again Aug. 12 and is soliciting public input on how to allocate the funds, which can be submitted via arpa.mt.gov through Aug. 9.

Composed of legislators and officials from the governor’s administration, the commission is one of four advisory boards Montana lawmakers set up this year to help steer allocation of the state’s $2.2 billion share of the March American Rescue Plan Act, the latest federal coronavirus relief package. The other three commissions are focused respectively on health and human service programs, water and sewer infrastructure, and an effort to expand broadband internet access across the state.

The economic transformation commission, in contrast, has a broader mandate to review proposals submitted by the state departments of commerce, agriculture, and labor and industry.  Its seats are packed with several of state government’s key political figures, including Senate President Mark Blasdel, Speaker of the House Wylie Galt, House Appropriations Committee Chair Llew Jones and House Minority Leader Kim Abbott, as well as the governor’s Budget Director Kurt Alme and Chief of Staff Chris Heggem.

“We’re focused on making long-term investments that will help create sustainable, good-paying jobs and bring greater opportunities to Montanans,” Gianforte said in a statement Thursday. “Hearing directly from Montanans yields the best results for our communities, so I encourage folks to have their voices heard to help guide the commission’s decisions.”

At its first meeting in May, the economic commission endorsed Gianforte’s proposal to put $15 million toward “return to work” bonuses designed to address the state’s post-pandemic worker shortage. During this year’s legislative session, lawmakers also carved out another $10 million of the commission’s $150 million allocation for short-term job retraining programs and set aside up to $4.5 million for administrative costs, leaving roughly $120 million unspoken for.

The four spending buckets endorsed by the commission Wednesday were proposed by the governor’s office and adopted with bipartisan support. ARPA Program Director Mike Foster told commission members the business innovation category would be focused on projects that can bring the state more high-paying jobs, and that investments in value-added agriculture can bolster the state economy by helping the state’s ag sector shift from exporting relatively low-value raw products to higher-value ones that have gone through more processing by Montana companies.

Foster also said the governor wants to expand workforce development efforts and provide the training workers need to qualify for higher-skill, higher-wage jobs. Additionally, he acknowledged that policymakers are hearing from employers and workers that housing is increasingly a barrier as companies try to find new workers in places where tight housing markets have driven up rents and purchase prices.

“That’s a tricky challenge, because we want to be respectful of the free market, but at the same time we want to see if there are ways we can help,” Foster said.

Several nonprofit and for-profit housing developers who build rent-limited affordable apartments told the commission in public comment Wednesday that rising costs for construction materials and labor have thrown a wrench in their work — in some cases threatening to scuttle tax-credit-subsidized projects that were moving forward before the pandemic. Several developers asked for gap financing support to help them patch up their project budgets. Others urged the commission to allocate money to subsidizing more housing projects designed to be affordable for working-class Montanans.

“If we need supply, let’s add supply. That’s how you beat a constrained market,” said Montana Housing Coalition Chair Sheila Rice.

Patrick Barkey, director of the University of Montana’s Bureau of Business and Economic Research, cautioned the commission against turning too quickly to direct subsidies such as housing assistance when the fundamental problem is that there aren’t enough homes to house everyone, or offering childcare vouchers in places where there aren’t enough providers to take care of all the kids who need watching. When there isn’t enough supply to go around, he said, subsidies tend to make things worse by driving up prices.

“We fundamentally have a supply-constrained economy with too much stimulus,” Barkey said.

Barbara Wagner, the state labor department’s chief economist, delivered a cautiously optimistic assessment of the state economy, however. Montana’s gross domestic product, a measure of the total value of goods and services produced in the state, has recovered to within 1% of its pre-pandemic peak, she said. Wagner also said the state’s tight labor market, which has made it hard for some businesses to find workers, has loosened somewhat over the last two months.

Montana’s labor pool, the number of people who are either actively employed or looking for work, is still down by 5,400 workers from February 2020, the month before the virus was first detected in Montana. However, the pool has grown by about 5,700 workers since March, a trend Wagner attributed to vaccine distribution and employers beginning to offer higher wages in an attempt to fill vacant positions.

Gianforte, a Republican, chose to end the expanded unemployment benefits that were offered to out-of-work Montanans during the pandemic at the end of June in favor of offering the return-to-work bonuses. The governor has said he believed the expanded benefits were discouraging people from returning to work.

Nearly 11,000 Montana workers were claiming pandemic unemployment benefits when the expanded benefits were cut off June 26, according to Wagner. She said it will take another couple of months of data collection before economists will have a reliable sense of how many of those workers find jobs.Data on a labor department dashboard tracking the return-to-work program indicate the department had received applications for the bonus from 3,196 Montana workers as of July 16. It had paid out bonuses, which formerly unemployed workers are eligible for after four weeks in a new job, to 65 recipients.

This story is published by Montana Free Press as part of the Long Streets Project, which explores Montana’s economy with in-depth reporting. This work is supported in part by a grant from the Greater Montana Foundation, which encourages communication on issues, trends, and values of importance to Montanans. Discuss MTFP’s Long Streets work with Lead Reporter Eric Dietrich at edietrich@montanafreepress.org.