The economy of these counties is based on their abundant natural resources. These resources include the land, which is used for crop and livestock production, mining, and oil and gas production, and the water and wildlife that offer outdoor recreation opportunities. Most of the counties' employment and personal income is derived from these natural resources. There are no major retail trade centers in the two counties.
The total number of jobs declined between 1980 and 1988 as would be expected, based on the decline in population. The counties lost jobs due to low commodity prices including oil and gas, drought, and the general business recession in the early 1980s (Table 3.4). The percentage of farm proprietors in the counties is double the statewide average, but the numbers continue to decline. Wage and salary employment has provided the majority of new job opportunities in the area since 1970.
Farm income accounted for 16 percent of total personal income in 1990, approximately the same as in 1980 after declining during the 1970s (Table 3.5). While farm earnings and employment will continue to play an important role in the economy, it will remain volatile in the short term. The trend toward farm consolidation and mechanized labor will continue to reduce jobs. Unless the decline in jobs is arrested, the population decline will continue.
Toole County is dissected by the Burlington Northern Railroad's northern mainline and by Interstate 15, a major north-south component of the emerging Rocky Mountain Trade Corridor. Shelby is becoming a vital link in the intermodal transportation network in the northern portion of the corridor.
Jobs created by the transportation, recreation and tourism industries, including hunting, can offer alternatives to those displaced agriculture and oil field workers. Jobs in the transportation sector may require skills transferable from the oil fields while many of the jobs in the food service and motel business are entry level and provide initial work experiences. Other jobs resulting from increased tourism may pay substantially higher wages, including travel agents, outfitters, resort managers, and retail business owners to name a few. The recreation and tourism industry can add diversity and stability to the economy of the area. A recently released study by the Montana Institute for Tourism and Recreation Research states that the economic impacts and jobs created by non-resident expenditures have been underestimated in the past (University of Montana, 1989). Enhancing recreational opportunities can play a key role in the area's economic future.
The total number of jobs in Liberty and Toole Counties was 4,231 in 1988, down 6.5 percent from 4,527 in 1980 (Table 3.4), which was near the peak of oil and gas activity spurred by high prices and tight supplies world-wide.
Total jobs include both sole proprietors, historically farmers and ranchers, and wage and salary employment. Wage and salary employment was 62 percent of the total employment in 1970, and 66 percent the total in 1990, down from 71 percent in 1980 (Table 3.5). The statewide average for 1990 was 76 percent. The high percentage of wage and salary jobs is due in large part to the oil and gas development and the construction of an intermodal transportation hub at Shelby in the mid 1980s.
The decrease in the number of farm proprietors since 1970 is a reflection of the overall general consolidation in the agriculture sector that has led to a decline in the number of farms statewide. The increase in the number of nonfarm sole proprietors parallels the increase in oil and gas activity early in the decade and the increases in trade and tourism along the I-15 corridor later in the decade.
Expenditures for hardrock exploration in the Sweet Grass Hills area of Toole and Liberty Counties since 1983, are estimated to be between $1.5 and $2 million, occurring during the field season between May and October (Lehmann, 1992). The average annual expenditures since 1983, are estimated to be $150,000 to $200,000. Expenditures include wages, fuel, equipment rentals, repairs, food, lodging and contract services (such as construction, drilling and helicopter services). As exploration dollars are spent (direct expenditures) they circulate through the local economy generating additional rounds of spending (secondary spending). The sum of direct expenditures and secondary spending is known as the total economic impact. Assuming 50 percent of average annual expenditures have been spent locally, the total economic impact is estimated to have been between $127,000 and $170,000 annually. Crews have consisted of up to five individuals during the field season with additional employment supplied by contractors (Lehmann, 1992). Most of these personnel have been based in Chester or Shelby. Additionally, spending activity is estimated to have contributed up to two jobs in the local area. Thus, total annual employment attributable to exploration activity is estimated to be about seven jobs.
Total personal income is the most comprehensive measure of all income flows in an area. It includes income from wages and salaries, employee benefits, sole proprietors, property income (interest, dividends, and rent), and government transfer payments (social security, medical payments, and unemployment insurance). Farm income and nonfarm income for selected years are shown in Table 3.5.
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Source: Bureau of Economic Analysis, U.S. Department of Commerce, 1993
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1988
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Personal Income |
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Source: Bureau of Economic Analysis,U.S. Department of Commerce, REIS, 1993
From 1970 to 1990 the total personal income of the counties increased by less than 2 percent, measured in constant dollars after adjusting for inflation. However, per capita personal income increased 13.4 percent, from $15,950 in 1970 to $18,094 in 1990 due to the decline in population (Tables 3.3 and 3.5).
The changing nature of the local economy evident in the employment data, is further reflected in the diverging trends in nonfarm and farm incomes. Nonfarm income continues to grow while farm earnings, which accounted for 43 percent of total personal income in 1970, have fallen to 18 percent of the total in 1990. While farm income rebounded in late 1980s to 23.7 million dollars, this was a 58 percent decrease from 1970. On the other hand nonfarm income increased 46 percent over the period due to the increase in employment resulting from oil and gas development and retail trade.
Property taxes are calculated on the assessed value of the property, the statutory rate for the class of property that it belongs to, and the mill levy in the jurisdiction in which the property is located. The market values, taxable values, and property taxes levied in 1990 for the counties is shown in Table 3.6.
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Source: Biennial Report of the Montana Department of Revenue, 1988-1990.
The BLM's principal contribution to local revenues arises from the value of produced Federal oil and gas in the area. The counties assess a Local Government Severance Tax and a Net Proceeds Tax on the value of the oil and gas produced. Federal lands accounted for 14.4 percent of the oil and 12.7 percent of the gas produced in the area in 1991.
The BLM administers a number of programs which provide for disbursements to local governments. The major sources of these revenues are Federal mineral and grazing leases and payments in lieu of taxes (PILT).
The Mineral Lands Leasing Act of 1920, as amended, provides that one-half of the bonuses, rents, and royalties derived from Federal mineral leases be returned to the state and counties for stated purposes. Federal oil production for the five year period FY 1988 to FY 1992 averaged 18 thousand bbls in Liberty county and 100 thousand bbls in Toole County. Federal gas production for the same period was 164 thousand mcfs in Liberty County and 727 thousand mcfs in Toole County. Federal receipts averaged $491,000 annually of which 50 percent was returned to the state.
The Taylor Grazing Act stipulates that states receive a 12.5 percent share of grazing fees collected inside grazing districts (Section 3 payments). The states also receive a 50 percent share of grazing fees collected outside organized grazing districts (Section 15 payments). Under the law, the state legislature of each state decides how the money is spent for the benefit of the counties. The total of the Section 15 and Section 3 grazing fee receipts for FY 1992 were $3,697 for Liberty county and $8,440 for Toole County.
The Federal government makes payments to counties in lieu of taxes for certain Federal lands located in those counties. The amount of PILT payments is calculated using two different formulas; the one yielding the largest amount to the county determines the level of PILT. The PILT payments for FY 1992 were $24,749 for Liberty County and $32,195 for Toole County. Each year funding for PILT must be appropriated by Congress, and actual amounts paid to the counties must be prorated based on the funding level and the amount the county is due through the formula calculations. Generally, the amount appropriated for PILT is less than the full funding level, so a percentage of the full amount due is distributed to the counties.