2002 Report to the People of Montana

A Bolder, Better Future for Montana Families
2002 Report to the People of Montana - Governor Judy Martz
January 23, 2002

We are pleased to report to the people of Montana the accomplishments of the Martz/Ohs Administration as we complete our first year in office. We are committed to an open government and feel a duty and responsibility to inform Montanans of our first year as stewards of this office.

Our priorities provide the foundation to build a better Montana and reflect a focus on economic development, including the following:

• good paying jobs in a quality environment;
• tax reform;
• education funding reform; and
• reliable, affordable energy.
• affordable healthcare

Through fiscal discipline the State of Montana is currently one of only four states in the entire nation without a budget deficit. Throughout our administration, we will continue to be fiscally responsible.

This report addresses where we started, our accomplishments and where we are headed. We appreciate the opportunity to share this information with the people of Montana.

Governor Judy Martz
Lt. Governor Karl Ohs

Responsive Government

Meeting the needs of the citizens of Montana while maintaining a balanced budget is the foundation of responsive government. In order to accomplish any objectives in education, human resources, health care, and natural resource management, we must have a strong, vibrant economy. At a time when budgets are stretched, state government must tighten its belt and work with legislators, communities and local officials to strengthen the state's economic base and find innovative solutions to problems. State government must also evaluate its own ongoing programs and measure their progress for responsiveness and cost-effectiveness.

Responsible Fiscal Management

• Montana is one of only four states in the nation without a budget deficit.
• During the 2001 Legislative Session, more than $100 million of proposed new spending and tax increases were opposed and prevented.
• The state budget is managed to serve the needs of people while ensuring that Montana's books are balanced.
• Established the position of Chief Information Technology Officer to increase government efficiency through the use of technology, and to ensure Montana receives maximum return for taxpayer dollars spent on information technology resources.

Reinstitution of Capital For A Day

• Through Capital For a Day, state government goes directly to the people of Montana to ensure that their concerns and ideas are heard and that their needs are being met.
• Discussions with local officials in Laurel focused upon concerns about their drinking water system.
• At a public meeting in Hamilton state and federal efforts in forest management, particularly in the area of salvage logging, were discussed.
• In Havre, a forum was held on the expansion of Highway 2, an important issue to the people of the Hi-Line.
• A meeting with Holly sugar growers, plant managers and local officials in Sidney discussed state regulatory burdens and the importance of supporting vital local industry.
• In Roundup, the contributions of local veterans to ensure national freedoms were recognized.

Streamlining of State Regulations

• New on-line license renewal initiatives save professionals and the State of Montana time and money, speeding up what has been a very paper-intensive process for both. The first licenses offered for renewal on-line are nursing and real estate professionals (Department of Labor and Industry).
• Licensing procedures were streamlined, creating a more business-friendly process without compromising environmental standards.
• The Department of Revenue provides better service to liquor license applicants through a streamlined licensing process.

Good Paying Jobs in a Quality Environment

When the Martz/Ohs Administration took office in January 2001, Montana's economic development programs were fragmented, with numerous local and regional development efforts but no statewide, coordinated plan. In addition, Montana's 'stated' income and capital gains tax rates rank among the highest in the nation, making business retention and recruitment difficult.

A vibrant economy, made up of strong businesses, lends itself to healthy communities and a high quality of life. However, if the economy falters, business, labor, and communities are harmed, revenues decline, and our ability to address social issues such as education and health care becomes limited. Working together, we will create an economy to match our unparalleled quality of life.

Economic Development

• Created the Governor's Office of Economic Opportunity to promote Montana businesses, attract complimentary businesses to the state, and develop our workforce for better paying jobs. This office coordinates economic development activities of state agencies, promoting accountability in state government.
• Reorganized the Montana Department of Commerce to specifically focus on business promotion and recruitment.
• Created a website - www.bizmt.com - and marketing plan to promote Montana as a premier business location.
• Organized a clearinghouse for information related to financial programs in state government.
• Established Montana Office in Washington, DC to address state issues and opportunities at the federal level.

Economic Development Goals

• Short and long-term goals were unveiled in January of 2002 in the Economic Development Framework.

Vision for Economic Prosperity:

• The State of Montana will work with the private sector and local communities to facilitate growth and diversity in our state's economy and to enhance the quality of life for all citizens. Montana will become a leader in creating knowledge-based jobs, utilizing leading edge technology in all industries, and developing a globally competitive business environment.

Guiding Principles for Economic Development:

1. Foster globally competitive business environment by enhancing the private sector
2. Provide the opportunity for all Montana citizens to share economic prosperity and a high quality of life for all regions of the state
3. Enable economic development by increasing government responsiveness and efficiency, and by providing a competitive tax structure.
4. Grow our traditional and existing businesses and industries.
5. Encourage the startup, expansion and attraction of businesses that provide sustainable economic growth and good paying jobs.

• Continue to provide support for existing businesses, recruit new businesses, and create an environment that supports new business creation.
• Coordination of workforce training to ensure Montanans are trained for good paying jobs.
• Development of a comprehensive tax reform package that will benefit the working people of Montana and stimulate our state's economy.
• Ensure continued accountability for state programs and tax dollars spent.

Quality Education and Workforce Development

Only a true partnership between education and economic development can genuinely improve the challenges facing both our educators and our businesses. One of those challenges is to improve the level of teacher compensation. Working together with the education community, we will ensure the creation of good paying jobs for Montana workers and the development of an economy that will provide the increased revenue necessary to maintain and improve our world-class education system. Increased funding for education, specifically aimed at improving teacher pay, will be a priority utilization of revenues resulting from economic development. The funding system for K-12 education must also be revamped.

Education Funding

• Approved the largest K-12 budget in Montana history. The budget provides a funding level of over $7,000 per student.
• Strongly supported a proposal to add additional school funding through the use of the Coal Tax Trust Fund.
• Established Governor's K-12 Public School Funding Advisory Committee to explore funding options for the 21st century.
• Supported a bill to allow Montana voters to approve the investment of portions of the public school trust fund in a broader range of investments, providing the opportunity for increased returns for K-12 education.

Higher Education

• Approved a $22 million (8.7%) increase in general fund spending for higher education. Coupled with the pay increases for Montana University System staff, the higher education system in Montana received a funding increase in excess of 13%.
• Through joint efforts with the Board of Regents, economic development is now a part of the Board's mission statement.

Education Goals

• The economy in this new century requires a highly skilled, educated, well-trained and innovative workforce. Montana employers face the challenge of finding trained and qualified workers. Therefore, we will facilitate a higher level of coordination and collaboration between the business and education communities. Worker skills must evolve quickly, demanding continuous development and quick adaptation of public education and workforce training programs.
• Forge a better overall approach to fund our state's schools - both in terms of equity and stability.
• Ensure adequate funding for our schools while taking budget constraints into consideration.
• Begin the dialogue to transition to performance-based budgeting for universities.
• Provide incentives to Montana job creators willing to invest in workforce training.
• To encourage attendance, examine the effectiveness of tuition freezes at vocational institutions in order to strengthen and expand vocational and technological curriculum.
• Partner with industries to develop relevant skill standards, training, and curricula.

Workforce Development Goals

• Facilitate and strengthen the statewide integration of education, workforce, and economic development to maximize the return on investment in workforce and education spending.
• Minimize the gap in skill between the current and future needs for skilled workers in dynamic regional based economies.
• Ensure workforce access to job opportunities and educational choices that allow them to advance their skills and improve their earnings in their regional labor markets.

Responsible Natural Resource Development

Montana has been faced with a number of federal directives implemented by the previous federal administration. The Upper Missouri River Breaks Monument was signed. A total ban on snowmobiles in Yellowstone Park was proposed. A proposal was developed to introduce grizzly bears into the Selway-Bitterroot National Forest. Over 6 million acres of Forest Service Lands were locked up for the Roadless Initiative. Add to this the resource issues that resulted from the 2000 forest fires, and it becomes apparent Montana's natural resource challenges over the past year have been immense.

Federal Issues

• Requested that the Congressional Delegation carry legislation that would allow private property to be excluded from the Monument's boundaries, based on recommendations from the Upper Missouri River Breaks Monument Task Force.
• Testified before Congress on the National Fire Plan.
• Testified before Congress and encouraged the US Forest Service to improve the health of our state's and nation's forests.
• Worked with the National Park Service to find a common-sense approach to snowmobile use in Yellowstone Park.
• Based on administration input and recommendations, the Interior Department is reevaluating federal plans to reintroduce grizzlies into the Selway-Bitterroot National Forest.

State Lands

• Montana has taken a proactive lead in initiating and completing burned timber salvage on state lands. Over $5 million dollars was generated for the school trust from the state's completed salvage operations in the Bitterroot. An additional $2 million dollars will be generated from current salvage sales resulting from last summer's fires.
• While the federal government continues to be ground in procedural gridlock on timber salvage, the State of Montana has successfully removed burned timber, rehabilitating the land.

Conservation & Environmental Protection

• The Department of Fish, Wildlife and Parks negotiated conservation easements on 74,380 acres and acquired another 5,890 acres of critical wildlife habitats.
• Two new Fishing Access Sites were established. State Parks lands were consolidated at Ulm Pishkun State Park, Makoshika State Park, and Bannack State Park. A new state park, "Traveler's Rest," was established near Lolo.
• The Department of Environmental Quality put in place a Memorandum of Agreement with Wyoming for cooperation in permitting Coal Bed Natural Gas water discharges that protect public health and the environment.

Natural Resource Goals

• Ensure that Montana's tough environmental standards are upheld with sound management practices and reclamation.
• Continue to manage resources with environmentally sensitive practices to create and sustain high paying jobs.
• Support development of coal bed natural gas and other resources in an environmentally sound manner.
• Continue to pursue streamlining of permitting processes while maintaining the integrity of the environment.

Affordable, Reliable Energy

All economic development objectives are dependent on affordable, reliable energy. We are committed to ensure the availability of low-cost, reliable and affordable power for all consumers in Montana. What a difference a year makes in terms of energy. Last spring, prices in California were ten times higher than normal, and severe energy shortages resulted in rolling 'brown-outs' across California. At the same time Montana Power, the default supplier, was in the process of negotiating contracts and developing a power portfolio. We urged the Public Service Commission to take a hard look at Montana Power Company's proposal to increase consumer rates - originally slated to be 50%. Montana Power has since announced that their electricity rate increase on July 1, 2002, will be closer to 13% and we urge the PSC to make it even lower.

Energy

• Urged the Public Service Commission to take a realistic look at Montana Power Company's proposal to increase consumer electricity rates.
• Took an active role in supporting energy conservation education for Montana consumers through programs like 'Energize Montana.' Developed an 'Energize Montana' brochure and worked with the Bonneville Power Administration to produce energy conservation public service announcements.
• Established the Governor's Advisory Council on Electricity Prices to advise the Governor on energy policy and solutions to electricity price and supply issues.
• Worked with private industry to develop a regulatory environment conducive to new power generation facilities such as NorthWestern's gas fired plant in Great Falls. The 2001 Legislature passed and the Governor signed legislation that lowered tax rates on capital investment in Montana to encourage development of new generation power facilities.
• Supported and approved legislation that allowed large industrial users a one-time chance to opt back into regulated energy rates.
• Pressed for legislation that protects the environment, while streamlining the process for building new power facilities; also signed tax incentives for new power plants that direct at least a portion of their energy to Montanans.
• Signed an executive order to reduce state agency energy usage by 10% and continue to work with agencies to accomplish this goal.
• Work with the Western Governor's Association to address solutions regarding regional power transmission and generation. Governor Martz is currently the association's vice-chair.

Energy Goals

• Ensure the best possible short and long-term rate for Montana's energy consumers.
• Continue to look at transmission capacities, both in Montana and throughout the West; new power generation only benefits customers if that power can be delivered to where the need exists.
• Work with Montana's oil and natural gas industries to responsibly develop those natural resources, including coal bed natural gas.
• Continue to strongly encourage the development of new power generating facilities to meet changing energy demands in the 21st century.
• Continue to explore alternative energy options including wind, solar and geothermal.
• Encourage all Montanans to conserve and become more energy efficient.

Libby

The issue of a Superfund Designation for Libby was one of the most important decisions of our first year in office. In December 2001, we announced to the people of Libby utilization of the state's one and only 'silver bullet', to ensure a Superfund Designation for Libby. In the process, the Governor asked for specific assurances, including 1) a commitment that the residential and business district be cleaned and de-listed within three years, 2) a commitment that the business and homeowners not be held financially accountable for cleanup costs, 3) a commitment for receipt of documentation for homeowners and businesses certifying cleanup completion, and 4) a commitment to employ local residents to the greatest extent possible for all investigative and remedial efforts.

We are committed to do what is best for the people of Libby and will work to ensure that all measures taken in the community are achieved in cooperation with local residents. We will ensure that Libby is a safe place to live, work and play.

Libby

• Utilized Montana's one and only 'silver bullet' to ensure a timely Superfund listing.
• Arranged for EPA Administrator Christie Todd Whitman to visit, as well as representatives from the Occupational Safety and Health Agency and the Mine Safety and Health Agency.
• Successfully negotiated terms with the EPA to ensure that the agency abide by certain requirements in the best interests of the people of Libby.
• Officials from the Montana Departments of Environmental Quality, Public Health and Human Services, and Labor and Industry met numerous times with citizens and officials in Libby in the process of making the Superfund designation, ensuring that the people of Libby have access to the services they need and that their concerns will continue to be heard.

Goals For Libby

• We will continue to take a hard line on the Superfund designation with the EPA to guarantee that the commitments made in the agreement are upheld.
• Work with the community and appropriate state and federal agencies to ensure that the short and long-term health care needs of the citizens of Libby are fully met.

Agricultural Development

In the May 2000 special session, based on recommendations from industry representatives, the legislature approved agricultural development initiatives aimed at doubling the value of agriculture. We continue to support efforts that will build and expand our state's agricultural economy.

Economic Development for Agriculture

• Continued to deliver the goals and objectives provided by the Vision 2005 Task Force and passed in the 2000 special session.
• In February 2001, the first Governor's Conference on Value-Added Food Processing was held. Following the meeting, an advisory council was appointed to create a collaborative effort for food processing companies and to develop a statewide vision for use of the 'Montana Image'.
• Met with rail service providers to address concerns over their use of inverse pricing tactics that place Montana producers in an unfair competitive position with other states.

Animal Health Regulations

• Montana must maintain its brucellosis-free status. We continue to work through federal channels to ensure that the federal government takes responsibility for disease-infected bison leaving Yellowstone National Park.
• Entered into a cooperative agreement with the U.S. Department of Health and Human Services - FDA to prevent the occurrence of BSE (mad cow disease) in livestock.
• Through Montana's Department of Livestock, entered into an agreement with the Alberta Cattle Feeders to prove that Bluetongue and Anaplasmosis are artificial trade barriers to our cattle industry.
• Implemented a three-year study to show that Montana's cattle are not a disease risk to Canada.
• In response to the potential threat of Foot and Mouth Disease and agri-terrorism, the Montana Department of Livestock, in cooperation with the Montana Department of Agriculture, worked to develop and implement Foreign Animal Disease (FAD) prevention activities.

International Trade

• The Montana Department of Agriculture coordinated with Alberta to hold the second Montana-Alberta Agriculture Opportunities Conference in June 2001 to improve trade relations between the United States and Canada.
• Through export promotions in Taiwan, Montana is recognized as a premier supplier of organic and natural food products.
• Montana serves as a member of the Tri-National Trade Accord, proactively working to resolve trade issues with Canada and Mexico while providing key input to the U.S. Trade Representative's Office.

Organic Certification

• In April 2001, in accordance with statutory requirements, the Montana organic community petitioned the Department of Agriculture to create a state organic certification program. When USDA approval is received, the organic program must be approved by a majority of those who requested its creation.

Goals

• Seek to improve export opportunities and access to new and emerging markets for the benefit of all producers and value-added processors.
• In partnership with the private sector, continue to provide opportunities to expand the processing of agricultural products in Montana.
• Continue to work on behalf of Montana's agricultural industry to remove barriers to agricultural trade.

State-Tribal Relations

• The administration has pursued opportunities to build and expand relationships between the state and tribal governments and we are working to seek mutual agreement on key issues. Improving economic opportunity on reservations is critical to our economic development efforts.

State-Tribal Relations

• Issued a proclamation in June 2001 to affirm our commitment to ongoing discussions with Montana's Tribal Nations and to recognize the historical relationships shaped by laws and treaties.
• Visited all of the reservations in Montana; attended community forums on each reservation to discuss issues affecting the delivery of services to tribes through state agencies.
• Held a State-Tribal Relations Forum in September 2001.
• Montana's Department of Transportation has worked with all of the Tribes to provide safe and efficient transportation systems.
• Montana's Department of Military Affairs conducted Civil - Medical Innovative Readiness Training (C-MIRT) on all seven Indian Reservations in Montana. C-MIRTs provide valuable realistic training for medical personnel while at the same time provide medical support to Reservations.

State-Tribal Relations Goals

• Continue to research federal match requirements for highway projects, workforce training, and other federally funded programs; must have a clear understanding of federal requirements for both states and tribes.
• Work with Native American Veterans through visits from Montana's Department of Military Affairs to assist in obtaining entitlements and benefits.
• Working in coordination with the State/Tribal Economic Development Commission, the Governor's Office of Economic Opportunity will conduct an Economic Plan Listening Session for Tribal Nations and the Indian Economic Development Organization.
• Continue to meet quarterly with the Tribal leaders.
• Continue commitment to each Reservation, ensuring that mutual dialogue continues not just in Helena, but also in the communities that are directly impacted by the decisions governments make.

Human Services

Human Services make up the second largest component of the state's budget. Workforce shortages in health care, ranging from nurses to technicians, have left Montana short-handed in places where personnel are most critically needed. We have seen steady increases in medical care costs since 1998. In 1996, Montana was in the top six states for methamphetamine admission rates to state substance abuse treatment centers. Montana has the fourth highest rate of uninsured citizens in the nation. These critical needs require immediate attention. We are stepping forward at all levels to ensure that our human service needs are met.

Health Care

• Partnered with the Attorney General and the Board of Crime Control to create the Alcohol, Tobacco and Other Drug Policy Task Force to develop a statewide drug control strategy to address the drug and substance abuse and drug trafficking problems in Montana.
• Established the Health Care Workforce Shortage Task Force to make recommendations on the critical workforce shortage issues.
• Successfully gained federal government approval to use intergovernmental transfers from 32 counties to increase funding to financially strapped nursing facilities of more than $20 million over the next 2 1/2 years.
• Received legislative approval to expand Medicaid coverage for chemical dependency treatment and worked to plan and develop a system that delegates more authority and responsibility to local service areas.
• Successfully gained federal government approval for 32 rural hospitals to use intergovernmental transfers which will return an additional $3.4 million dollars to the hospitals this fiscal year.
• Administered a constitutional trust in which 40% of the state's tobacco settlement dollars will be invested; interest from the trust will be used for health-related purposes, including a rate increase for healthcare providers.
• Supported change to expand Medicaid coverage to include treatment for breast and cervical cancer.
• Youth ChalleNGe under the Department of Military Affairs has assisted over 370 young adults since its inception; 80% of all graduates have earned their General Education Diploma. ChalleNGe Montana led all ChalleNGe programs last year in GED success rates.

Human Service Goals

• Work in close consultation with health care industry representatives and legislative groups to actively address health care needs.
• Continue to work to ensure that all Montanans have affordable, reliable access to health care.
• Work in cooperation with the interests of the public, drug enforcement, prosecution, courts, corrections, tribal governments, education, prevention and treatment entities to address substance abuse issues.
• Explore options that would expand health care insurance coverage for children, while acknowledging budget realities.

Homeland Security

On September 11, 2001, our world changed forever. The attacks on the World Trade Center, the Pentagon, and the crash of Flight 93 in a Pennsylvania field brought to America the reality of international terrorism, and were catalysts for state and local officials across the country to invigorate efforts to identify and prevent potential threats. Prior to September 11th, the state had in place an effective emergency management system to deal with disasters such as forest fires but plans alone do not make us immune to the threats of terrorism. It is vital that we are aware of the potential threats to our state such as anthrax or other forms of bioterrorism, and our resources that are potential targets such as livestock, power plants, and dams. Coordination among all levels of government is vital to provide protection for our citizens, our livelihoods and our resources.

Homeland Security

• Created Montana's Homeland Security Task Force to develop clear lines of communication and protocol for working with the U.S. Office of Homeland Security, the Anti-Terrorism Task Force formed by the U.S. Department of Justice and all other relevant federal, state, local, tribal and private agencies and organizations.
• The Homeland Security Task Force is developing and implementing a comprehensive statewide strategy to strengthen Montana's capabilities to detect, prepare for, prevent, protect against, respond to and recover from any terrorist threats or attacks within the state.
• Urged the Bush Administration to provide increased security along our northern border.
• Submitted testimony to the US Senate emphasizing improved communications between federal and local law enforcement for both intelligence and prevention efforts; and emphasizing the need for federal support of state and local budgets in the aftermath of September 11 to adequately protect the citizens of northern border states.
• Responded to bioterrorism threat. Montana's Department of Public Health and Human Services disseminated information to public health agencies, and set up a screening protocol with local law enforcement officials and successfully processed about 170 anthrax tests within three months. The department also actively participated in federal efforts to develop anti-terrorism legislation and to develop a national anti-terrorism budget.
• Completed the State of Montana's Three-Year Domestic Preparedness Strategic Plan which qualifies Montana for state domestic preparedness federal funding and will serve as a foundation in the efforts to plan, prepare, and respond to acts of terrorism and weapons of mass destruction that affect the state.
• Montana was one of the first states to have threat information on the Internet following the September 11th attacks.

Homeland Security Goals

• Finalize the Homeland Security strategic plan.
• Work with local city, tribal, and county law enforcement, fire, EMS, health and emergency management personnel to ensure proper training, communications and funding are in place.
• Access to information is vital to ensure public confidence in the ability of state government to respond to any situation. The State of Montana is working hard to inform the public of on-going security and disaster-preparedness measures being taken while dealing carefully with sensitive information.
• If disasters occur, to ensure accurate and timely information distribution through established networks.