In reelection bid, Gianforte's economic record is on the ballot

Eric Dietrich

Montana Free Press

As candidate Greg Gianforte campaigned for his first term as Montana governor in 2020, touting his billion-dollar success as a Bozeman tech entrepreneur, his endorsement by the editorial page of the Billings Gazette came with a pointed caveat:

Hand the reins of state government to Gianforte and his fellow Republicans, the Gazette's editorial board wrote, and Montanans would be well-advised to keep a close eye on how his jobs-jobs-jobs pitch would translate to governance. 

"If Gianforte is in charge, he and the Republican majority in the Legislature will be squarely accountable for what they do with the power the state's voters have seen fit to hand them," the Gazette wrote. "We will see if the promise of a small-government version of Montana will lift the economy, with benefits actually trickling down to the state's less fortunate, or whether the rich simply get richer and the poor poorer. We will see if the great promise of 'running the government like a business' proves up."

Four years later, as Gianforte seeks reelection over a challenge from Democrat Ryan Busse, a conservation advocate and former firearms sales executive, questions about economic opportunity in Montana are again taking center stage. As they head to the polls this year, voters will get to weigh the double edges of the Gianforte economy: both the economic growth he promised as a 2020 candidate and the surging housing prices he didn't. 

Gianforte, who declined through campaign manager Jake Eaton to interview with Montana Free Press for this story, has kept a relatively low profile as he makes his reelection bid, putting himself in the public eye primarily through official appearances, short TV spots and dialogues with friendly media personalities such as Cascade County Sheriff Jesse Slaughter. As Gianforte has discussed economic issues on the campaign trail, he's endorsed offering homeowner tax relief by raising rates on second homes but has otherwise focused on his record in the governor's office rather than a policy agenda he intends to champion in a second term.

Among the achievements Gianforte has touted in recent months are state income tax cuts, which he's argued make Montana a more attractive location for entrepreneurs, and the decision to put much of the state's historic 2023 budget surplus toward sizable tax rebates. He's applauded both homegrown Montana businesses and major investments by international companies, ranging from an Amazon facility outside Missoula to a German company's tech manufacturing campus in Lewistown. He's set up task forces to address housing affordability and rising residential property taxes, cost-of-living frustrations that have worsened over his first term.

Asked by Slaughter about his accomplishments as governor during a podcast interview in early July, Gianforte turned to a common refrain - his efforts to "create jobs and protect our way of life."

"We have more people working in Montana than ever before, our unemployment is at record low levels, and it's in large part because we understand that we have to help Montanans keep what they've earned," Gianforte said.

Busse doesn't share that rosy view of Montana's economic trajectory under Republican leadership. He's built his campaign around critiques of Gianforte's leadership, arguing the governor has been too deferential to moneyed interests and too sluggish in tackling the challenges faced by middle- and lower-income Montanans.

"Every chance he gets, he gives wealthy people an advantage," Busse said during a mid-September interview with MTFP. "And that advantage comes at the disadvantage of working people and average citizens."

Busse has taken particular aim at Gianforte's handling of the state property tax system, which, according to an MTFP analysis, produced a 21% tax increase for the median residential property last year even as some large industrial taxpayers saw lower bills. He's also criticized the governor for failing to prevent economic setbacks like the closure of Seeley Lake's longtime lumber mill and backing pro-construction housing bills that Busse worries may produce a financial windfall for developers without providing meaningful affordability relief.

When it comes to articulating policies he'd champion to address cost-of-living frustrations, however, Busse has been light on specifics. He's been vocal about rebalancing the property tax system to reduce residential tax bills, but acknowledged that his campaign hasn't developed a comprehensive plan for addressing the state's housing crisis. Busse also said he hasn't spent "a ton of time" thinking about income taxes, both a key piece of Gianforte's economic development agenda and the primary funding source for the state government.

Instead, Busse said, he thinks he could use the governor's office, which was held by Democrats from 2005 to 2020, to encourage a more egalitarian Montana where labor unions, safety net programs and public education are strong enough to keep the state livable for rich and poor residents alike.

"There isn't just a button you push and you fix everything," Busse said. But, he argued, state government can help maintain a social fabric that works for everyone. "And I think the governor is attacking that," Busse said. "He's pulling these threads in so many ways."

THE GIANFORTE ECONOMY

For decades, Montana was a state where residents could forge a decent life without a lot of money. Since the onset of the COVID-19 pandemic in 2020, during Democratic Gov. Steve Bullock's last year in office, rising consumer costs - for housing especially - have fundamentally changed that opportunity.

Housing prices, which had already become painful for local workers in destination communities like Bozeman and Missoula, shot through the roof statewide amid a surge of pandemic migration. According to the U.S. Census Bureau, the state's median rent rose from about $830 a month in the pre-COVID world of 2019 to $1,080 last year, a 30% increase. An analysis by Bankrate, a consumer finance company, estimates that the annual income necessary to make a median Montana home affordable rose by 77% from about $74,000 in January 2020 to $131,000 in January 2024 - the largest increase in the nation.

Other costs are up too. Montana hasn't been spared the inflation wave that has swept the nation, producing a 23% increase in the consumer price index between the start of 2019 and the start of this year. Childcare costs are also rising for young families, with the typical bill for a toddler enrolled in full-time daycare last year estimated by the state labor department at $11,700.

On the flip side, recent years also brought many Montanans higher incomes - in part because the state's consistently tight post-COVID labor market has forced employers to raise wages in an effort to attract and retain employees. Gianforte has touted the state's nationally prominent wage growth under his administration as a major success, while consistently blaming inflation on national Democrats and President Joe Biden.

"Thanks to our 'just get 'er done' work ethic and our pro-business, pro-jobs policy, Montana's economy is on the move," Gianforte told reporters in September while highlighting the labor department's annual Labor Day economic report.

Montana's per capita income as tabulated by the U.S. Bureau of Economic Analysis rose from about $49,700 a year in 2019 to about $65,000 last year, the seventh-fastest increase in the nation. Those figures, which count the incomes of both longtime residents and COVID-era arrivals, signal a sizeable 31% increase in Montanans' average income. That increase exceeds inflation and is roughly on par with the rise in median rents, but is well behind the surge in home prices.

On the campaign trail this year, Gianforte has focused on the upsides of the state economy, often making appearances alongside successful local entrepreneurs. 

"[T]he American dream is still alive and well here in Montana," he recently told Lee newspapers. "When you combine opportunity with a Montana work ethic, people can get ahead."

Bryce Ward, a Missoula-based economist, said Montana is facing a dynamic that often creates dilemmas for regional economies: Lovely places to live are rarely able to maintain affordability and economic opportunity at the same time.

"The reason Montana was affordable wasn't because it didn't have desirable attributes - it was because there were a limited number of good jobs here," Ward said. "If you succeed in increasing opportunity, Montana will become less affordable because the quality of life is hard to touch."

As such, Gianforte's pledge to bring more good-paying jobs to the state may, for better or worse, help push Montana's traditional hardscrabble affordability into the history books.

That conundrum was on display relatively early in Gianforte's term when his administration launched a "Come Home Montana" campaign, sending out more than 100,000 glossy marketing mailers in an attempt to convince Montana university graduates to return to the state. Landing just as the housing crunch shifted from a localized concern to a statewide crisis, the campaign produced significant blowback as residents worried its success would make the housing situation even worse.

One mailer recipient, a Bozeman-area native then working a remote job from Colorado, described the effort as "sort of cannibalistic." The Helena-area Habitat for Humanity chapter responded by taking out a full-page newspaper ad pushing Gianforte to work housing access into his economic development strategy.

In aggregate, the Montana economy has boomed under Gianforte, as remote work, business expansion and affluent new arrivals bring new wealth and its associated opportunities. According to the Bureau of Economic Analysis, the state's annual gross domestic product, the total value of goods and services produced in the Montana economy, grew by 14% between 2019 and last year even after adjusting for inflation.

However, while many Montana workers, particularly private-sector professionals, have seen strong wage growth, not every worker has been lifted by the tide. As Ward noted, for example, K-12 teacher pay hasn't kept up with the cost of living.

"You can't have declining real wages for the education sector - that does not work long-term," Ward said. 

Data compiled by state economists for the Labor Day report indicates wage growth has been uneven across industries. Professional service workers such as lawyers, architects and veterinarians saw their inflation-adjusted average wages grow by more than 3% between 2020 and 2023, with the average professional services worker earning nearly $95,000 last year.

Construction wages have also outpaced inflation, while health care wages have fallen slightly behind. The inflation-adjusted wages of workers in public administration and education have fallen, with educators seeing their real wages decline by 2.7%.

Asked at the Labor Day press conference what he's doing to keep public employee pay in line with rising living costs, Gianforte pointed to his 2021 TEACH Act, which offered incentives for districts to increase pay for early-career teachers. A January analysis by nonpartisan legislative staff concluded that Montana districts received extra money under the TEACH Act for about 500 early-career educators last year. That's a small fraction of the approximately 11,000 classroom teachers statewide.

Gianforte's answer also cited raises from pay plans negotiated between the executive branch and public employee unions in recent years. Those increases were 55 cents an hour in November 2022 and then $1.50 per hour for lower-paid state and university system employees in July 2023 and 2024 They boosted the baseline salary for a state worker previously making $40,000 a year to $47,320 a year - an increase of 18%.

"We were faced with record-high inflation, in large part because of federal policy," Gianforte said, adding that the pay plan had been designed to provide bigger boosts for lower-income employees. "I think a worker is due their wages, and we have to be a good employer at the state as well."

THE HOUSING CRUNCH

While Gianforte now routinely says he believes housing affordability is "probably the biggest issue facing working families in Montana," the topic was notably absent from his policy agenda until a year and a half into his term. The word "housing" doesn't appear in the "Montana Comeback Plan" circulated as a policy roadmap by Gianforte's 2020 campaign, and it received only glancing mention via a modest property tax relief proposal in the governor's 2021 State of the State speech.

It wasn't until mid-2022 that the governor made a public commitment to tackling the housing crunch head-on, announcing a housing task force charged with producing affordability recommendations for the 2023 Legislature. While legislative Democrats pitched a proposal that would have spent $500 million to build subsidized housing, the Republican governor was clear that he wanted to focus on making housing cheaper and easier for the private sector to build.

"Strict zoning and other housing supply regulations are really a wet blanket on construction, on responsible development. They increase costs and limit supply," the governor said at the task force's initial meeting. "We've got to get government out of the way, where we responsibly and safely can."

An initial round of task force recommendations focused on pro-construction measures, some of which made it harder for large city governments to restrict backyard apartments and duplexes. Those ideas, along with a much-negotiated $225 million spending package, were ultimately translated into bills that passed with support from many Democrats.

Gianforte has since touted those legislative wins as a major housing victory, pointing to national media coverage that labeled the bipartisan embrace of yes-in-my-backyard housing policy a "Montana Miracle." However, partly because housing developments are typically years-long endeavors and some of the laws were temporarily blocked by litigation, the purported miracle has been slow to make a dent in the rents and home prices seen by the public.

Real estate website Zillow's Montana home value index has continued to climb since early 2023, even as higher mortgage rates discourage buyers. An analysis by the National Association of Realtors concluded that, as of April 2024, Montana had the least affordable housing market in the nation relative to resident incomes, lagging behind even California and Hawaii.

Home construction has actually slowed in Montana over the last two years, in part because higher interest rates have made it harder for developers to finance projects. Missoula building officials, for example, report that the number of dwelling units issued building permits in the city is roughly at historic levels after spiking as a result of a few large projects permitted in 2021.

There is some evidence that wave of new construction has pushed Missoula's rental vacancy rate up and perhaps softened rents. Gianforte, who has argued housing construction failed to keep up with population growth under prior governors, has at times cited that data as proof that his supply-focused house strategy is helping, even though the spike in Missoula building permits came before his 2023 housing reforms were passed.

The Gianforte housing task force published a new round of recommendations in August that could inform the governor's second-term housing agenda, such as limiting urban parking requirements for new construction and scrutinizing building code regulations for potential cost savings. The group also suggested establishing a state housing tax credit that would support the construction of below-market-rate apartments affordable to low-income residents.

Gianforte hasn't said which, if any, of these measures he would support if reelected, praising the task force work in general terms but demurring when asked about specific proposals. The state housing tax credit, a measure long sought by affordable housing developers to complement existing federal housing tax credits, could be a particular sticking point. Gianforte vetoed a housing tax credit bill that was passed by the Legislature in 2021 and has long said he generally believes market-based solutions are better than trying to produce affordability with public dollars.

"At a statewide level, the problem is so big we can't buy our way out of it," Gianforte said after a public appearance at a late-September groundbreaking for a Helena affordable housing project supported by federal credits. "We've got to unleash the private sector to build the supply of homes that Montanans need."

Busse, who prefers to address housing affordability questions by turning to property taxes, hasn't made the broader affordability issue a major part of his campaign. As of Oct. 10, housing was mentioned only in passing on the issues page of his campaign website, receiving a three-word mention under a "small business" header. Other Democrats, including western district U.S. House candidate Monica Tranel, who has drafted a formal housing plan, have made housing affordability a cornerstone of their pitch to voters this year.

In an interview with MTFP, Busse said he's skeptical about laws that preempt city zoning powers in the name of boosting housing supply. He also said he supports funding tax credits to support the construction of low-income housing.

One example of a housing project he likes, Busse said, is the Bridger View project in Bozeman. That nonprofit-led effort used philanthropic dollars and several variances from the city development code to build homes priced for middle-income residents on land that was historically a trailer park, with an initial round of homes occupied in 2022.

"I haven't developed a plan comprehensively across the state, but I just think the state needs to be creative with the sort of creative housing solutions like that instead of just making sure that developers, you know, profit from development," Busse told MTFP in September. "It's not that developers aren't important - they are - but, again, I say that the primary beneficiary here ought to be working people."

On the supply side of the equation, Busse said he'd like to use the state labor department to address construction industry labor shortages by bolstering numbers of unionized tradespeople. He also criticized a Gianforte policy that lets journeymen in licensed construction trades supervise two apprentices at a time rather than one. That policy shift has been championed by the governor as a reasonable way to bring more workers into short-staffed trades but criticized by trade unions, which have argued it compromises training quality and job site safety.

"It's an attack on union labor when those apprenticeship percentages are rolled back or diluted," Busse said. "I don't think we ought to be doing that. I think we ought to be promoting union labor as a way to grow the middle class here and as a way to grow our wages and benefits."

THE PROPERTY TAX BALANCE

Busse has argued that rising property taxes represent a major affordability concern for existing Montana homeowners, who have been otherwise shielded from the affordability crisis faced by renters and aspiring homebuyers.

Rising home values have rippled through the state's property tax system, which collects the lion's share of funding for local government services like schools and law enforcement using formulas laid out in state law.



The COVID-era jump in residential property values, reflected for the first time in last year's tax bills, drove up taxes for many homeowners, in large part by pulling tax burden off of industrial properties where values didn't increase proportionately.

The governor and the Republican-dominated Legislature have broad power to rework the property tax system by changing the laws that govern it. Gianforte, however, has consistently blamed property tax woes on local government spending.

"The state doesn't have that much control over property taxes. We're required by law to appraise property at its market value, and then the county commissioners set the rate," Gianforte said in his July interview with Slaughter.

That explanation omits a key step in Montana's property tax math. Conversion rates set by the Legislature and governor translate a property's market value to the taxable value used to calculate its tax bill. Those conversion rates give state officials a tool to balance tax burden between different classes of property by deciding whether the tax system should lean harder on, for example, mines and lumber mills versus residential properties or farms.

Busse has forcefully argued that the Gianforte administration blundered by failing to rework conversion rates during last year's Legislature, action that could have blunted how rising home values translated to higher taxes on homeowners. Busse has seized in particular on a statutorily required revenue department memo from 2022 outlining how lawmakers could have tweaked the tax system to rebalance tax valuations for residential, commercial and agricultural properties. 

"We need to adjust the multiplier rate as previous governors have done," Busse told MTFP. "That's the simple, most obvious, most impactful thing. It wasn't done."

That rebalancing approach would not have addressed the tax shift away from industrial properties, and Republicans have argued it would have shoved tax burden onto farms and small businesses. In his interview with MTFP, Busse acknowledged that he believes the simple rebalancing may need to be followed by "some other more creative fairness mechanisms."

Gianforte's tax task force, convened early this year, has recommended that the 2025 Legislature consider a "homestead" exemption that would in essence split the state's existing residential property category, lowering taxes on primary residences and long-term rental properties by giving them a lower conversion rate and raising taxes on second homes and Airbnb-style rentals with a higher rate.

The governor has voiced explicit support for that proposal, saying at an August task force meeting that preferential tax treatment for primary residences "will provide good long-term relief."

"It will also ensure that out-of-staters who don't live here, don't pay income taxes here, and own second homes here pay their fair share, not only for our schools, but law enforcement, roads and bridges [and] emergency response," Gianforte said.

THE INCOME TAX CLIMATE

Over the last four years, Gianforte and legislative Republicans have also reworked Montana's income tax system, reducing taxes on higher earners in an effort to make Montana a more attractive destination for entrepreneurs who can create jobs by relocating from out of state.

State income taxes are the primary funding stream for state-level services including health care programs, prisons and the publicly funded portions of the Montana University System.

Gianforte signed a major tax code overhaul into law in 2021 and has, over his two legislative sessions in office, lowered the state's top-bracket tax rate from 6.9% to 5.9%. The governor, who has said he'd ultimately like to pull the top-bracket rate below 5%, has argued that lower tax rates are a key part of his economic strategy. His 2023 income tax cut bill also boosted the state earned income tax credit, which reduces taxes on low- and moderate-income working families.

Legislative Democrats have strenuously objected to lowering the top-bracket rate, calling the change a giveaway to the rich that they believe will ultimately harm the state's ability to support services for lower-income residents.

In his interview with MTFP, Busse didn't provide a direct answer to a question about whether he'd try to reverse Gianforte's income tax rate cuts.

"I think we have to take a serious look at tax fairness," he said. "I don't have an income tax plan and I haven't spent a ton of time assessing income taxes. My sense is, though, that in this state there's an awful lot of burden on working folks and middle-class folks. And we may need to assess what that tax break looks like at the upper echelon."

In part because the state and national economies have been energized by COVID-era federal stimulus spending and in part because of an influx of wealthy arrivals moving in from out of state, Gianforte's tax cuts have so far not produced the budget crisis its Democratic opponents warned of. Despite a $30-million-a-year income tax cut that took effect in 2022, for example, the state came into the 2023 legislative session with an estimated $2.5 billion surplus.

'THE MONTANA WAY OF LIFE'

Gianforte often talks about governing the state to "protect the Montana way of life." He's explicit in his belief that business-oriented economic policy is the key that unlocks the best possible future for Montanans: lower taxes, more business investment, more good jobs.

Busse's campaign pitch, framed on signs and stickers as "Get Your Montana Back," hinges instead on the notion that the Republican governor's economic leadership has backfired, unleashing a torrent of wealth that threatens to overwhelm the state's best attributes. The Democrat argues that his leadership would produce a Montana that works for everyone whether or not they have deep pockets.

Busse said his vision for Montana contrasts with "this idea that a few wealthy corporations can be brought here and then the rest of us can be service workers for these wealthy folks."

"That's really not the kind of model I see as sustainable for the state," he said.

He pointed to the governor's appearance at a ribbon-cutting for Amazon's Missoula facility in March, shortly after Pyramid Mountain Lumber in Seeley Lake announced its impending closure. In a release, the 70-year-old business cited shutdown factors including low lumber prices and labor and housing shortages.

"Gianforte is celebrating this opening of this Amazon warehouse in Missoula with, I don't know, $16 an hour labor to profit a billionaire who has a rocket, whose main business model is tearing apart local retailers," Busse told MTFP. "I am not in favor of recruiting those sorts of businesses. I do not want this to be a state of high-tech Amazon warehouses when our timber mills are shutting down."

(Gianforte has said the state didn't make an active effort to recruit Amazon like it has with some manufacturing companies. MTFP reported previously that Amazon said it was paying Missoula workers who move and sort packages between $17 and $19.40 an hour.)

Gianforte, though, argues that wealth flowing into Montana as a result of his leadership is irrigating opportunity for Montanans instead of washing it away. As he campaigns this year, he's forging ahead on the course he set four years ago.

"One of my most important responsibilities to the people of Montana is to make sure that Montana remains a sanctuary for freedom and free enterprise," Gianforte said in his conversation with Slaughter. "So that people who work hard can make their way - that the American Dream is still attainable."

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