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What Makes a City Business-Friendly?

By: Alison Berry

Date: Jan, 29 2013

[caption id="attachment_555" align="alignright" width="260"]MontanaPolicyInstitutePaper_Cover Image: The Montana Policy Institute[/caption] The Montana Policy Institute weighted business taxes as 40 percent of what makes a ‘business-friendly’ community, with only 20 percent attributed to ‘community allure.’ This left Montana’s fastest-growing towns low on their list. A report released last fall has us thinking; for cities in our region, what contributes to a business-friendly environment? The report from the Montana Policy Institute ranked the 25 largest cities in Montana based on three categories, Economic Vitality, Business Property Tax Rates, and Community Allure, with surprising results. The gold medal went to the Flathead Lake town of Polson, a community of 4,500 people, where at least six “highly visible” downtown businesses recently shut down for good, according to the Missoulian. In second place was Sidney, a slightly larger town on Montana’s eastern border scrambling to keep up with boom times spilling over from the Bakken oil and gas fields. And taking bronze was the northeastern community of Glasgow (pop. 3,300), which has still not recovered to 1960s population levels since the closing of the Glasgow Air Force Base in 1969. We were surprised that Montana’s fastest growing cities didn’t score higher. According to data provided in the report, from 2000 to 2010, the most growth has been in and around Montana’s larger cities, resort areas and college towns. Polson fell to number nine with respect to growth in the 2000s, behind Montana’s largest city (Billings), university towns and their neighbors (Bozeman, Belgrade, Missoula and Hamilton), and the Glacier National Park area (Kalispell, Columbia Falls and Whitefish). Glasgow ranked a distant 18, and Sidney came in at number 12. Why aren’t Montana’s fastest-growing towns considered “business friendly?” The answer is in how the Montana Policy Institute weighted the factors going into this analysis. MPI put a heavy value on property tax rates for businesses, which accounted for 40 percent of the overall score. Sidney and Polson came out on top in this category, scoring 99 and 95 out of 100, respectively. Faster-growing cities lagged, with Bozeman scoring 67, Billings 44, and Missoula only 10. MPI attributed only 20 percent of the overall score to “Community Allure.” Those percentage points were divided among four factors: cost of living (7%), violent crime rates (7%), educated workforce (3%), and standardized high school test scores (3%). The remaining 40 percent fell into “Economic Vitality,” divvied up between job growth (20%), population growth (10%), and median income (10%). The problem with this ranking system is that, for people moving to Montana’s cities and towns, the priorities are different than what is reflected in MPI’s study. It’s likely that the incoming population places a much greater value on median income, an educated workforce, or low violent crime rates—all categories where many of the fastest-growing cities perform well.


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