Montana Proposes Economic Development Trust Fund

New Montana Gov. Brian Schweitzer has an aggressive pro-development approach and wants a lean, mean machine operating in the Montana Governor’s Office of Economic Opportunity, focused on business development and not on administering programs, says Evan Barrett, chief business development officer, Montana Governor’s Office of Economic Opportunity. This means moving all operational programs out of the office to appropriate departments in the state to run them.

Business Expansion Journal

http://www.bxjonline.com/bxj/article.asp?magarticle_id=795&mag_id=1

********

Thanks to Thomas C. Rolfstad – Williston, N.D. Economic Development for passing this along. Russ

********

Gov. Schweitzer is presenting a series of initiatives to the Legislature that will impact economic development capacity in Montana, as well as its overall business climate. Because the Legislature only meets every two years in Montana, the governor and economic development officials have many initiatives to get through.

Among the initiatives being proposed to the Legislature include funding for the Made In Montana program, which is a small business assistance program; funding for the Indian Country economic development initiative for Montana’s seven American Indian reservations; and funding to market Montana as a place to conduct business.

Another proposed bill is the Economic Development Trust Fund, where 75 percent of those funds will go into business creation activities; and the remaining 25 percent will go into capacity building to assist local economic development corporations with items such as feasibility study costs. The bill is a 20-year trust that will start out with $3 million in this biennium.

Montana officials also want to put $5 million into scholarships, with many of them targeted toward two-year institutions or specific industries related to preparing people for new jobs.

The main point about the legislative requests, Barrett says, is that the initiatives total about $14 million in new spending across the biennium in economic development.
Barrett notes one last initiative. "The governor is supporting, and has made part of his package, a new tax incentive that is for new and expanding basic sector industries," he says. "The property taxes associated with projects can be reduced to one-third during the first three years to help with cash flow during the startup phase." Barrett adds the basic sector industry definition has been broadened to include new economy companies and service sector companies.

Targets
Barrett says because Montana is the fourth largest state, geographically, it features seven urban economies. Because of its size, the regional approach in Montana has a different meaning than it does for other areas. "When we talk about northwest Montana, and primarily Kalispell as the regional trade center, you are talking about an area with 80,000 people that is larger than the state of Connecticut," says Liz Harris, president, Flathead County Economic Development Authority.

Therefore each community has its own character and recreational offerings, Harris notes. Some communities feature a lower cost of living, some are industrial communities, and some feature strong arts and cultural amenities. What’s more, Glacier National Park, the crown jewel of the region, had 2 million visitors last year.
Harris says that northwest Montana’s uniqueness is its natural environment. The area is a predominately small business community. Small and medium-sized businesses that do well in the area include the service sector, which is a bit different than the typical service sector because many of the businesses don’t serve clients in the area, but rather clients located across the country. This is made possible because of the region’s telecom infrastructure, which features almost 800 miles of fiber-optic cable, and includes 98 percent DSL capacity. This year, CenturyTel will lay fiber directly to homes in 26 new subdivisions.

Entrepreneurs also do well in Montana. The Kalispell area is home to a number of high wealth individuals who have created a strong angel network of investors. One group listens to presentations from companies in Montana and those who would like to be in the state.

Entrepreneurs also do well because they will find overnight delivery services, and transportation options. Harris says the region offers direct flights to Phoenix, Seattle, Salt Lake City and Minneapolis from Glacier Park International Airport. Additional destinations should come to fruition this year.

On the state level, Barrett says his office will work with localities to develop appropriate natural resource development, which represents 6 percent of the state’s economy. This includes mining, which the state would like to double in the next few years. The state has oil, gas, and in particular, coal reserves. "They present opportunities for coal mining, and ultimately, power plant development and transmission line development," Barrett says.

Montana also hopes to increase its manufacturing base because it is just one-third of the national percentage, on average. The state is also an ideal location for wholesale and retail distribution companies. Distribution advantages are centered out of Billings and Butte because of their interstate connections.

Additional industries that are well suited to Montana include software development, IT and back office operations. Barrett says there has been significant technology growth in the Bozeman, Missoula, Butte and Kalispell regions.

Montana also wants to develop certain types of clusters. "We have a business cluster developing in biosciences," Barrett says. "We also have an active creative arts cluster and an active cluster in aerospace R&D activities, as well as other clusters focused in certain areas."

Workforce and Education
Harris says the state is adapting its workforce-training program for smaller businesses. "In the past a lot of the programs we had to offer were primarily for larger employers," she says. "The state has worked creatively to make the training available to companies that are training as few as 10 employees."

Another platform, Shared Leadership, assists entrepreneurs who are not located near universities in accessing expertise for product development, marketing, HR management, etc.

Locally, northwest Montana companies have access to Flathead Valley Community College, which is the largest of Montana’s two-year colleges. Harris says the college is nimble in its ability to offer customized training. For example, a large customer contact center in the region tapped into the college to provide its workers with a number of certifications in computer systems. Harris says that across the board the region has a skilled workforce in technology, and value-added wood production because of the timber industry in the area. "People are amazed at the workforce they will find here," she says. "People choose to live here. For instance, Semitool Inc. has 900 highly skilled engineers. For whatever reason, when people leave the company, they often stay here and start a business."

Business Climate
In addition to the industry strengths found in Montana, Barrett notes that the state is interested in securing federal projects related to homeland security and NASA. He says officials hope to have some of the work take place at the state’s American Indian reservations. By working in conjunction with the American Indian reservations companies can take advantage of federal programs.

Working in conjunction is something that northwest Montana’s businesses do well. The Glacier Technology Roundtable features about 60 groups that meet quarterly. Harris says the smaller technology companies work together because many of them are not large enough or don’t have specialized equipment to perform the work needed.

Harris notes the collaboration in the region among four wire harness companies that conduct a lot of work for both the domestic airline industry and the defense industry. One company has a laser wire marker that is an expensive piece of equipment.

Companies will bid for projects, or they will bid together. One company will do the marking, and one company will do the assembly so that the businesses can compete and grow.

When it comes down to why corporations should look to Montana as a place to conduct business, Harris says that the state is pro-business and that not only companies but their employees want to live in the state. "We have a terrific work ethic and wage rates are still competitive, relative to the rest of the United States," she adds.

For complete details about conducting business in Montana visit http://www.governor.mt.gov and http://www.flatheadport.org .

Thomas C. Rolfstad

Williston Economic Development

701-577-8110

"Half of the fun of travel is the esthetic of lostness."

— Ray Bradbury