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Montana Economy update from David Gibson- Door of opportunity- Editorial: Montana Economy has bright spots

With all its bills approved by the Legislature, the state’s economic growth office works to attract new businesses & jobs to Montana.

By CHARLES S. JOHNSON, IR State Bureau

HELENA – The state’s chief business officer, Dave Gibson, is elated over the recent legislative session’s passage of some key bills he believes will help spur Montana’s economy in the future.

Gibson is a businessman who returned to his native state 20 months ago as the new point person on economic development in Gov. Judy Martz’s office. He put together the state’s Office of Economic Opportunity, created by the 2001 Legislature.

"We have a Legislature that meets every two years and makes big decisions," he said. "We got basically everything we wanted to get done done. We had huge bipartisan support on all but the tax proposal."

The new laws include measures to reduce income-tax rates and capital gains, to extend the life of some economic development programs, to create an intermediary re-lending program within the state Board of Investments, to create a primary workforce training program and to provide for recertification of certified communities.

Lowering Montana’s top individual income-tax rate of 11 percent to 6.9 percent should elevate Montana from 38th to 30th place in the important Small Business Survival Committee rankings, Gibson estimated.

"The best indicator I have in the 18 to 20 months I’ve been here that talks about the creation of jobs and small businesses, which in Montana is 99.9 percent of our businesses, has just moved up eight flipping spots," he said. "We just went from the bottom third to the middle of the pack. It will take 10 years for our average income to move up there."

The tax bill, Senate Bill 407, was the subject of intense partisan debate before finally passing, with Democrats arguing the wealthiest would get the largest dollar amounts of tax breaks, while Republicans said the poorest Montanans would get the largest percentage of breaks.

"We haven’t had major tax reform in years," Gibson said. "The tax thing is huge. We have had this 11 percent marginal rate scaring the dickens out of people."

When he arrived in Helena in fall 2001, Gibson had to hire five more people for the office. His first mission was to write a strategic plan. Gibson said the team drafted some ideas and hit the road for 15 formal meetings and lots of others.

"Did we get some good ideas? Yeah," he said. "Was that the main idea? No. People got to know us and we got to know them."

His office wrote and published "A Framework for Economic Development," which amounted to a draft plan released in January 2002. Over the next eight months or so, his office formalized and distilled it and came up with actions with benchmarks. The revised document, a state economic development plan for the next five to 10 years developed with the help of a number of constituencies, was produced last fall as "Montana’s Roadmap for a New Economy: The Driver for Prosperity."

"If you have no strategy, you put all your chips on Red 21 and spin the wheel," he said.

Gibson said his office has been involved with local economic development organizations on some of the big projects that have been announced: the International Malting Co.’s malting plant in Great Falls, the grain-loading elevator for Anheuser-Busch in Sidney and a wireless broadband company brought to Butte. He is working now with local economic development officials to attract a national company’s regional headquarters in the state.

Businesses looking to expand or relocate in Montana expect to be able to deal with someone at the state level closely tied to the governor, Gibson said.

"The governor’s influence here is actually very important," he said.

For example, in the case of the malting plant, a number of issues arose, including a water-rights question involving Giant Springs, a state park, that could have threatened chances of landing the project. His office helped work out the problem in about five hours by calling a meeting with key state government officials.

"I asked them (a senior engineer for the malting plant), ‘What else do you need?’" Gibson said. "The guy said, ‘We’re fine. We just had to make sure since we’re building a $60 million plant, the state government is prepared to squash any issue that came up.’"

Gibson said he’s not implying "we did it alone and we’re the heroes," because there’s an important role for everyone at the state and local level. He emphasized over and over again the need for strong local economic development organizations.

"It’s important to have the state level and it’s important to have the local level," he said. "You can’t have one without the other.

"And if you screw up, the project goes to South Dakota," he said. "If the storefront looks uninviting, no one walks in the door."

Gibson gets high marks from a couple of key members of the Montana Economic Developers Association, comprising local economic development officials.

Paul Tuss, executive director of Bear Paw Development Corp. of Havre and president of the state association, said Martz couldn’t have found a better person than Gibson for the state business officer’s job.

"I’ve talked to legislators on both sides of the aisle that are very supportive of not just the office but of Dave personally, and of the management style and the leadership that he’s brought to economic development as a public policy issue," Tuss said. "I think he’s done a good job and the office is very necessary, and I’m pleased that this past legislative session decided to continue to fund this office."

Tuss said the association of local economic developers believes the state office is really needed because economic development needed the higher profile of having someone in the governor’s office work on this issue.

"I think Dave Gibson has done a very good job, considering that essentially what they were trying to get done out of that office was starting at ground zero," said Evan Barrett, executive director of the Butte Local Development Corp. and legislative and public policy chairman of the Montana Economic Developers Association.

Barrett said the delivery of economic development services at the state level is much more coordinated than it ever was before and, consequently, key bills passed.

"That’s an awful lot starting from ground zero 21 months ago." Barrett said. "Now the rubber meets the road at this point. The plans are in place and the legislation’s in place. Now it’s about producing jobs."

http://www.helenair.com/articles/2003/06/01/business/e01060103_01.txt

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Editorial: Montana Economy has bright spots

Optimistic notes rippled through the economic summit gatherings in Billings last week, and the same positive waves are pervasive in an interview with the state’s chief business officer, Dave Gibson, in today’s business section of the IR.

By IR staff

Gibson, who has been at the helm of the Office of Economic Opportunity for about 20 months now, is elated over action by the Legislature that he feels will spur Montana’s economy.

"We got basically everything we wanted to get done," he told the IR State Bureau.

click here

Most important, Gibson’s bureau survived, despite some early discussions that it would be among the legislative cost-saving cuts.

Also, of special significance was the passage of Senate Bill 407, a major tax reform bill that lowers the state’s top individual income-tax rate from 11 percent to 6.9 percent. It also provides a tax credit of 1 percent on any capital gains reported for federal income tax purposes.

"This tax thing is huge," Gibson said. "We have had this 11 percent marginal rate scaring the dickens out of people."

At the economic summit in Billings the buzz word was "clusters," a concept that builds common competitive advantages for similar businesses.

According to a report prepared for the governor, Montana has six predominant clusters: wood-based products, agri-food processing; outdoor recreation and tourism; creative enterprises (artists and artisans); life sciences; and information technology.

In the second day of the summit participants focused on the six clusters, exploring ideas and looking for competitive advantages.

A couple of other bright notes from Billings included a report from Pat Bresnan, Bresnan Communications vice president of community relations, who said the company plans to build a network operations center in Montana, bringing 85 to 100 jobs to the state over five years. Bresnan recently acquired cable television systems throughout the state,

And John Morgridge, board chair for Cisco Systems Inc., told conference attendees the most important component of economic development is an educated work force.

That has to be encouraging news for Montana, with its strong K-12, vocational and university systems.

We’ve never really warmed up to the doom and gloomers who are always lamenting about ranking 49th here and 48th there. Many of the loudest are driving fancy new pickups anyway.

We think Helena, like many other Montana urban centers, displays lots of solid economic advances, all nurtured in a quality place to live.

The downturn has made us all tighten our belts a notch or two. And we’ll go forward in a more measured cadence for a while, but we will go forward.

http://helenair.com/articles/2003/06/01/opinions_top/a04060103_01.txt

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Here are Gibson’s successful bills

By the IR State Bureau

HELENA – Here is a quick look at the what Dave Gibson, the state’s chief business officer, said were the major economic development bills passed by the 2003 Legislature:

— Senate Bill 407, by Sen. Bob DePratu, R-Whitefish. This bill, which raises taxes on cigarettes, other tobacco products and lodging, also includes some tax changes that Gibson believes are vital for economic development.

Beginning in January 2005, the law lowers Montana’s income-tax rates. The state currently has 10 tax brackets, from 2 to 11 percent, with 11 percent the highest stated tax rate in the country, although the effective rate is 7.7 percent.

The measure reduces state income taxes to seven brackets, from 1 percent to 6.9 percent, depending on income levels.

SB407 also provides a tax credit of 1 percent on any capital gains reported for federal income-tax purposes. This credit increases to 2 percent in tax year 2007.

— SB115, by Sen. Dale Mahlum, R-Missoula. This bill extends statutory appropriations by five years for some economic development programs – including the Cooperative Development Center, the Growth Through Agriculture Program and the Research and Commercialization Program – that would have otherwise expired in 2005.

— SB131, by Sen. Greg Barkus, R-Kalispell. This creates an intermediary relending program within the Board of Investments that requires loan proceeds to be used as matching funds for U.S. Department of Agriculture rural development loan programs and allows the board to buy a portion of "seasoned loans" from a local economic development organization’s revolving loan program.

— SB564, by Rep. Monica Lindeen, D-Huntley. This creates a primary sector business workforce training program, headed by a seven-member loan review committee, to make grants to qualifying "primary sector businesses" to pay for employee education and training as provided by eligible training providers.

Primary sector businesses are defined as those expanding to add value to a product, process or export service and for which at least half the sales occur outside Montana or the employer is a manufacturing company with at least half its sales to other Montana companies that have at least half their sales occurring outside Montana.

— House Bill 76, by Rep. Joe McKenney, R-Great Falls. This law provides for recertification of certified communities and redirection of statutory appropriation to provide funding for certified regional development corporations.

http://www.helenair.com/articles/2003/06/01/business/e03060103_01.txt

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