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The economic footprint of the federal government in Montana.

The federal government plays an important role in the national and state economies, having spent more than $3 trillion throughout the U.S. and almost $11 billion in Montana in fiscal year 2010. Federal spending varies significantly by state and may be thought of as influenced by politics, but in fact it is more influenced by economics and demographics. In Montana, the highest concentration of federal money goes to retirees in the form of Social Security and Medicare; agricultural payments to farmers and ranchers, Medicaid, and federal highway spending join in to make up the bulk of the significant spending.

Billions and trillions of dollars are almost too large to fathom. One method for putting them into perspective is to divide by population and analyze per capita federal spending. After making this calculation, we find that federal spending per capita in Montana is slightly above the U.S. average ($10,873 vs. $10,460).

Montana ranks 20th per capita in federal spending. The highest per capita spending in FY 2010 was in Alaska, with a figure of $17,762, perhaps due to the large federal land holdings in the state. Virginia and Maryland, both adjacent to the District of Columbia and home to many federal workers and government facilities, rank second and third. At the low end are Utah, Minnesota, and Nevada, where per capita federal spending was less than one-half of those states near the top.

Categories of Federal Spending

Analyzing total federal spending per capita becomes very vague and murky because it includes everything from school lunches to aircraft carriers. The federal document that reports federal spending divides it into five categories. Figure 1 presents these categories and compares their relative importance in Montana and the U.S.

Retirement and Disability Payments is dominated by Social Security and military and veterans' benefits. These payments account for about 28 percent of total federal spending in the U.S. and 32 percent in Montana.

Other Direct Payments to Individuals represents about 22 percent of total federal spending in Montana and about 25 percent nationwide. The largest single component for both the U.S. and Montana is Medicare. But in Montana, agricultural assistance (which includes payments to farmers and ranchers) also is significant.

The Grants category includes a wide variety of payments. The largest single item is Medicaid. In Montana, U.S. Department of Transportation payments also are very large and concentrated in Lewis and Clark County (Figure 4). This suggests that they are connected with federal highway spending. Grants account for 25 percent of federal spending in the U.S. and 22 percent in Montana.

The Procurement category includes all the things purchased by the federal government. The Department of Defense is the largest purchaser. Since very few defense contractors are located in Montana, it is not surprising that this category accounts for 16 percent of the total in the U.S. but only 8 percent in Montana.

The Salaries and Wages of federal workers account for about 11 percent of total federal spending in both the U.S. and Montana. The largest agencies in Montana are the Department of Defense (Malmstrom Airforce Base and reservists), the U.S. Postal Service, the Department of Agriculture (U.S. Forest Service), and the Department of the Interior (National Park Service).

Federal Spending in Montana

Figures 2 through 6 present per capita federal spending for each of the five categories in Montana, ranking the seven largest urban counties and the highest and lowest counties. It takes only a quick glance at the wealth of data to identify many findings, including:

* The seven urban areas tend to rank in the middle to low range (No. 30 to No. 50), with several exceptions;

* Lewis and Clark County ranks high because of a large figure for grants, which comes from the U.S. Department of Transportation and may be related to federal highway funding being funneled through state government. Cascade County ranks high because of the federal wages and salaries paid to the Air Force staff at Malmstrom Air Force Base and various reserve units;

* Daniels County ranks first in terms of total federal spending per capita. This high ranking was not due to one category. Daniels County ranked first in three of the five categories (Retirement and Disability, Other Direct Payments to Individuals, and Grants); and

* Roosevelt, Glacier, and Lake counties are three of the top five in terms of per capita procurements. All three are reservation counties. These procurement purchases may represent minority preference contracts awarded by the federal government.

In short, $11 billion annually of federal money coming into Montana is more or less noticeable in different parts of the state, depending how it is spent. All together, it has a significant effect on the state's economy.

Paul E. Polzin is the director emeritus at the Bureau of Business and Economic Research

Figure 1
Categories of Federal Spending,
FY 2010, Montana and U.S.

Montana

Retirement &    32%
Disability
Payments

Other           22%
Payments to
Individuals

Grants          27%

Procurement      8%

Salaries and    11%
Wages

U.S.

Retirement &    27%
Disability
Payments

Other           25%
Payments to
Individuals

Grants          21%

Procurement     16%

Salaries and    11%
Wages

Source: U.S. Bureau of the Census, Consolidated Federal Funds Report
for Fiscal Year 2010, State and County Areas, Washington, D.C., U.S.
Government Printing Office, 2011.

NOTE: Table made from pie chart.

Figure 2
Per Capita Federal Spending, FY 2010
Retirement and Disability, Montana and County

                   Dollars    Ranking

Montana             $3,440        7
Cascade             $4,185       20
Flathead            $3,662       29
Gallatin            $2,143       55
Lewis &Clark        $3,608       31
Missoula            $2,847       51
Silver Bow          $3,816       24
Yellowstone         $3,148       48

Top Five

Daniels County      $7,472
Sheridan County     $5,898
Mineral County      $5,449
Prairie County      $5,099
Sanders County      $4,957

Bottom Five

Rosebud County      $2,714
Glacier County      $2,595
Big Horn County     $2,271
Gallatin County     $2,143
Toole County        $2,040

Source: U.S. Bureau of the Census, Consolidated Federal Funds
Report for Fiscal Year 2010, State and County Areas, Washington,
D.C., U.S. Government Printing Office, 2011.

Note: Table made from bar graph.

Figure 3
Per Capita Federal Spending, FY 2010
Other Direct Payments to Individuals,
Montana and County

                    Dollars    Ranking

Montana             $2,426       28
Cascade             $2,029       38
Flathead            $1,174       53
Gallatin            $816         55
Lewis & Clark       $2,114       35
Missoula            $1,306       51
Silver Bow          $2,462       32
Yellowstone         $1,438       48

Top Five

Daniels County       $12,601
Sheridan County       $8,609
McCone County         $8,332
Choteau County        $7,941
Liberty County        $7,490

Bottom Five

Ravalli County        $1,269
Flathead County       $1,174
Jefferson County        $934
Gallatin County         $816
Rosebud County          $246

Source: U.S. Bureau of the Census, Consolidated Federal Funds
Report for Fiscal Year 2010, State and County Areas, Washington,
D.C., U.S. Government Printing Office, 2011.

Note: Table made from bar graph.

Figure 4
Per Capita Federal Spending, FY 2010
Grants, Montana and County

                       Dollars    Ranking

Montana                $2,971        11
Cascade                $2,105        18
Flathead               $888          49
Gallatin               $1,832        23
Lewis & Clark          $16,528        2
Missoula               $1,853        22
Silver Bow             $2,395        14
Yellowstone            $1,235        38

Top Five

Daniels County          $22,609
Lewis & Clark County    $16,528
Roosevelt County        $10,812
Blaine County            $5,654
Glacier County           $4,685

Bottom Five

Sweet Grass County         $674
Stillwater County          $495
Treasure County            $317
Golden Valley County       $286
Petroleum County           $283

Source: U.S. Bureau of the Census, Consolidated Federal
Funds Report for Fiscal Year 2010, State and County Areas,
Washington, D.C., U.S. Government Printing Office, 2011.

Note: Table made from bar graph.

Figure 5
Per Capita Federal Spending, FY 2010
Procurements, Montana and County

                      Dollars    Ranking

Montana               $828         42
Cascade               $1,313       11
Flathead              $498         26
Gallatin              $419         31
Lewis & Clark         $956         12
Missoula              $533         24
Silver Bow            S389         32
Yellowstone           $755         15

Top Five

Roosevelt County        $6,785
Glacier County          $3,675
Liberty County          $2,979
Lake County             $2,089
Dawson County           $2,070

Bottom Five

Musselshell County        $103
Chouteau County            $94
Prairie County             $79
Fallon County              $71
Sweet Grass County         $67

Source: U.S. Bureau of the Census, Consolidated Federal
Funds Report for Fiscal Year 2010, State and County Areas,
Washington, D.C., U.S. Government Printing Office, 2011.

Note: Table made from bar graph.

Figure 6
Per Capita Federal Spending, FY 2010
Wages and Salaries, Montana and County

                           Dollars    Ranking

Montana                    $1,207       18
Cascade                    $2,935        2
Flathead                   $707         29
Gallatin                   $677         31
Lewis & Clark              $2,623        3
Missoula                   $950         22
Silver Bow                 $765         28
Yellowstone                $1,070       19

Top Five

Jefferson County             $3,902
Cascade County               $2,935
Lewis and Clark County       $2,623
Toole County                 $2,353
Beaverhead County            $2,307

Bottom Five

Park County                    $310
Fallon County                  $289
Musselshell County             $274
Stillwater County              $258
Lake County                    $233

Source: U.S. Bureau of the Census, Consolidated Federal Funds
Report for Fiscal Year 2010, State and County Areas, Washington,
D.C., U.S. Government Printing Office, 2011.

Note: Table made from bar graph.
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Comment:The economic footprint of the federal government in Montana.
Author:Polzin, Paul E.
Publication:Montana Business Quarterly
Article Type:Statistical data
Geographic Code:1U8MT
Date:Dec 22, 2013
Words:1506
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