Ask your average person on the street what they would like to see relative to economic development in Great Falls and there is a good chance they would say, “Red Lobster.” Then ask them if they would rather see a Red Lobster, or an expansion of the Calumet Refinery, and again they would probably answer, “Red Lobster.”
Evidently, the citizens and the Great Falls City Commissioners are in sync. The City Commission’s unanimous decision to deny Calumet’s application for a graduated tax abatement was shortsighted and unfair to the company, which recently made a $454 million dollar commitment to the future of the only true manufacturing company left in Great Falls. By that, I mean a manufacturing facility that takes a raw material and makes something out of it.
Since 1922, the refinery has processed crude oil, first the Shelby fields, and more recently from the Bakken fields and Eastern Montana, and produced fuels and asphalt we use every day. The refinery is the remaining operation of what was once a booming Great Falls manufacturing backbone that supported many local families by providing good paying jobs. Of course, agricultural processing is also as old as Great Falls itself, but gone is the potato chip company, the corn nut company, the foundry, the brick plant, and of course, the Anaconda Company. These companies provided great paying jobs that supported families, educated young people and donated to our community in many ways – in addition to paying taxes.
The City’s staff report confirmed that Calumet’s application met all statutory eligibility criteria, that the expansion had a significant positive effect on the overall tax base of the City, that it had a positive impact on employment, that it will likely result in additional industrial development, that it contributes to the goals of the City’s Growth Policy, and that, overall, it is in the best interest of the City. The Calumet expansion is responsible for the creation of 40 new refinery jobs, and should spin off 276 new jobs worth a total earning impact of $14 million annually. Calumet paid $3.9 million in County property taxes in 2015 and with the abatement schedule it still would have paid a total of $46.5 million through 2026.
So what’s the rub? Well, with the tax abatement on the new investment of $454 million, Calumet would contribute $6 million less to the City and $6 million less to the School District over 10 years, but that would not have reduced its existing tax liability, only the future tax liability of its $454 million expansion. In other words, Calumet is being penalized for making a huge investment in our community, while other companies making much smaller investments have received tax abatements.
Recently, Brett Doney of the Great Falls Development Authority reported to the City Commission that the City lost 707 jobs in 2016 and that he has never seen numbers so scary in his 32 years working in economic development. But aren’t these exactly the types of jobs the City should be doing everything in its power to attract and retain?
You can have your personal opinions about tax abatement incentives on a whole, but the City’s denial of Calumet’s application was wrong, shortsighted, and not in the best interest of Great Falls.
On one hand, we don’t have a Red Lobster because we are half the size of Billings and not growing at the same rate as the other major cities in Montana.
The City’s decision to dismiss Calumet, by far our largest manufacturer and one of our community’s leading charitable donors, sends an ominous message to businesses: “You, and all of those you would employ, would be better off someplace else.”
And that is the real reason why Great Falls does not have a Red Lobster.