MINING, TAXES AND JOBS IN MONTANA: The Economic Contribution of Hard Rock Mining.

AuthorBarkey, Patrick M.
PositionRESEARCH

What would the economy of the state of Montana look like if the eight largest hard rock mines--producing copper, palladium, gold, talc, cement and other products and materials--did not exist? That was a question posed in a recent study produced by the Bureau of Business and Economic Research. It addressed--both for existing and for proposed new metal mines --the contributions made by hard rock mining to jobs, income, spending, tax receipts and population in the state.

The conclusion underscored the continuing importance of hard rock mining activities, not only to the economic livelihoods of the communities that are home to the mining operations, but also to the health of the state economy as a whole.

Last year, Montana's general fund revenues were extraordinarily weak. General fund collections--encompassing the entire suite of state taxes and fees not earmarked for specific use--managed to grow by just $20 million in 2017. On a base of $2.1 billion, that was roughly a tenth of a percentage point growth. The question was why these revenues were not coming in as they should have been?

Now with a complete accounting of the patterns of growth in Montana's economy, we see that a contraction in mining earnings of $225 million ultimately produced the worst revenue performance the state had seen since the end of the Great Recession (Figure 1). In truth, Montana's hard times in mining in 2016 pertained more to oil and gas activities in the wake of the oil price bust--these were included in the mining total. But the essential message, that events in high earnings natural resource industries have a disproportionate impact on the economy as a whole, was demonstrated dramatically.

The mining industry and the state economy enjoyed a much better year in 2017. But an understanding of how the mining industry--and in the case of this analysis, the hard rock mining industry--can exert such influence on economic outcomes clearly is important.

Research Approach

There are at least three ways to approach the assessment of hard rock minings importance to the economy. Certainly, the products produced by Montana's metal and talc mines --the palladium that goes into catalytic converters, the gold that is part of high-tech devices and the copper that goes into almost every electronic device--are of high value in a modern economy. Montana's hard rock mines are also an important employer and customer for Montana vendors in the communities in which they operate. Lastly...

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