Gerrymandering the Montana Supreme Court

Unless the courts toss it out on constitutional grounds some time soon, Montanans will have the dubious privilege of voting on LR-119 in this June’s primary election. This measure, which was pushed through the Legislature with heavy Republican and almost zero Democratic support, would provide for Montana Supreme Court justices to be elected in the future by district, rather than statewide, as they are now. Not surprisingly, given its provenance, the referendum has just won the approval of the Montana Chamber of Commerce.

LR-119 has been flying under the radar so far, but you can expect to hear a lot  more about it in the coming months. Proponents are going to be telling you that it will get people more interested in Supreme Court races, that it will bring those races down to the local level and make them more competitive and reflective of local  concerns, that it will create a regionally balanced court, that it will...well, who knows what additional benefits it will shower on Montana?

What you won’t hear from proponents is that if LR-119 passes and some day you have a case before the Supreme Court, you will have had the opportunity to vote for only one of its six members. You won’t hear that we will have a court that could, and very likely will, be made up of six justices, not one of whom could win a statewide election. You won’t hear that we will have a politicized court beholden to parochial regional interests rather than responsive to one people and one Constitution.

And what you really won’t hear is that Republicans want LR-119 to pass because it simply hasn’t been possible to elect at large enough like-minded justices to make the Montana Supreme Court as conservative as that other one in Washington, D.C. On the contrary: our court seems bent on protecting our right to a clean and healthy environment, or to privacy, or to keeping big corporate spending out of our elections. So what are the Republicans trying to do? In a word, they want to gerrymander the election of the Montana Supreme Court by carving out a few conservative districts. That way they can be sure that there will be a few would-be Alitos or Thomases or Scalias on the bench in Helena, even if a majority of Montanans don’t want them there.

Deceitful Job Claims

In a recent guest column that appeared in the Missoulian and the Billings Gazette, PPL Montana spokesman Gordon Criswell claimed that his company’s coal fired power plants in Colstrip have a very small negative impact on Montana’s environment and a very big positive impact on its economy.  To some of us, these claims sounded pretty outlandish. Writing in response to Criswell, Wade Hill, a Bozeman nurse, described the severe threat to public health posed by the Colstrip plants, and UM economist (and my former colleague) Tom Power and I questioned both the size and significance of the economic impacts that Criswell described. (Here are links to the three pieces: Criswell, Hill, and Barrett and Power).

Reading all the competing numbers and claims in these columns, you might be tempted to conclude that all they amount to is a large and messy academic dispute of no real consequence. When Tom and I said in our column that Criswell had exaggerated the importance of the jobs supported by the Colstrip plants, a Missoulian reader sent us a long and thoughtful email arguing that we had missed the real point: in this economy, we should realize that every job is needed and important.  We certainly agree with that, but there’s more to it.

All sorts of interests (businesses, non-profits, trade associations, schools and universities, developers, etc.) regularly use economic impact analysis to bolster the claim that unless they receive some kind of preferential treatment from the public, many, many jobs will be lost. That’s something that of course nobody wants, especially right now, and the public and policy makers need to take a threat of job loss seriously. On the other hand, preferential treatment can come at very high cost, in the form of weak environmental regulation (that seems to be what PPL is after) or selective subsidies and tax cuts that compromise important programs and reduce public sector employment.

Policy makers need to be very, very careful when weighing claims of job loss against the cost of preferential treatment, because the sad fact is that the losses are almost always overstated. Claiming to be important and to create a lot more  jobs than you really do in order to wrest concessions from the public is, frankly, deceitful and does us all a profound disservice.

Montana's Tax Climate is Good, But It Doesn't Mean Much

As Chuck Johnson reports in today's Missoulian, the Tax Foundation just released a report ranking Montana number eight among the states in providing a business friendly tax climate (you can read Chuck's story here). That sounds pretty good, but unfortunately, it doesn't mean very much. Even Webb Brown, the president of the Montana Chamber of Commerce, told Chuck that our ranking should be taken with a grain of salt.


For one thing, if the tax climate has anything to do with business performance in a state, it's because of the impact of taxes on costs. As the story goes, businesses will move from, say, Idaho to Montana if tax costs are lower here than in our neighbor to the west. Of course, there are lots of different costs of doing business, so even if Montana levies lower taxes than Idaho, businesses may not come here if in some other respect -  labor costs, for example -  we're the more expensive state. In other words, what counts, if anything, is not whether our taxes are higher or lower than our neighbor's, but how much lower. And that's why rankings don't tell us much. True, they tell us who's above us and who's below us, but not how far.  Consider an extreme case in which all states had pretty much identical taxes - some just a little lower and others just a little higher than average. These small differences would clearly have almost no impact on where companies decided to do business, but nevertheless we could use them to rank the states. It's just that the rankings wouldn't mean anything.


So if we want to figure out how taxes affect business performance, the first thing we should do is junk the tax cost rankings and look at the tax costs themselves. That's what the Tax Foundation tries to do (albeit not very well) when it calculates a business tax climate index for each state. Unfortunately, when economists have studied this issue in the past, they have had a hard time showing that differences in state tax costs have much of an impact on state business performance. There are any number of reasons this might be true, but one important one seems to be that interstate differences in tax costs are pretty small when compared to interstate differences in other costs, such as labor, rents or transportation. And those bigger cost differences outweigh taxes in business location decisions.


You can get an idea about just how little the Tax Foundation's tax climate index tells us by calculating the correlation coefficient between the value of the index for each state and some measure of state business performance; I did this using the 2011 value of the Tax Foundation index and the growth of wage and salary employment between 2008 and 2010 as my performance measure. In other words, I was trying to find out if its tax climate had anything to do with how badly or well a state did on the job front during the Great Recession. Correlation coefficients range between -1 and +1; if a good tax climate leads reliably to good job performance, the correlation coefficient should be close to +1. But the one I calculated turned out to be -.07. The negative sign means states with better tax climates actually tend to have weaker job performance! But don't worry! It's not really that bad; the value of .07 is so small that statistically it's no different from zero. In other words, there is no correlation - none -  between a state's Tax Foundation score and how well it does in creating jobs or holding onto jobs in a major downturn. 


Republican legislators take note: during last year's session, you argued that the best way to create jobs in Montana was to eliminate regulations and improve the tax climate for businesses. Every indication is that that's an argument you'll be making again in this year's campaigns. You probably don't want to be confused by the facts, but the fact seems to be that that strategy simply won't work.