Senate Tax holds work session on expanded ("dynamic") fiscal analysis for media tax credit ahead of hearing

The Montana Senate Taxation Committee on the morning of its work session heard from Legislative Fiscal Division staff about what an "expanded" or dynamic fiscal analysis would look like for a proposed change to the state's media production tax credit.

Sam Schafer, a staff economist with the Legislative Fiscal Division, told committee members the bill under consideration tomorrow would raise the annual cap on transferable media tax credits from $12 million to $30 million and that, under current assumptions, "the credits claimed will be an additional $18,000,000 a year." He emphasized that the standard fiscal note reports direct effects only and that an expanded analysis attempts to show spillover economic activity not captured in the fiscal note.

Why it matters: the state captures some tax revenue when production dollars are spent inside Montana (wages, purchases, lodging and other local purchases). An expanded analysis attempts to estimate how much of that activity "trickles through" the Montana economy and whether induced and indirect taxes offset part of the credit's fiscal cost.

Schafer walked the panel through the division's example scenarios. He summarized a two‑year production-spend report from the Montana Film Office showing about $334 million in production spend over two years (approximately $167 million annually) and noted roughly $184 million of that two-year total was reported as nonresident employee compensation. Under the division's examples, a $100 million qualified spend subject to a 25% credit would produce $25 million in credits while, at a baseline 5% effective revenue take of gross state product, direct taxes on that spend could be only $5 million before multipliers are applied. Using hypothetical multipliers (the presentation cited national and out‑of‑state studies), Schafer showed scenarios in which multipliers above 1.0 materially reduced the revenue shortfall between credits issued and taxes generated.

Committee members and staff discussed two practical constraints: time and scope. Schafer said leadership must request and approve any formal dynamic fiscal notes, and that committees sometimes choose only one or two expanded analyses per session because they are time consuming and can shift committee debate toward model assumptions. He also warned that multipliers and the share of spending retained in‑state (resident versus nonresident compensation) are the most sensitive assumptions in any expanded model.

The chair, Senator Jared Hertz, and several senators — including Senator Galt and Senator Fern — asked about previous work on the bill. Schafer said leadership authorized an expanded analysis when the bill was considered previously, which sped preparation this year because staff could update prior work rather than build a model from scratch.

The work session closed with staff and members agreeing the committee would hear the media credit bill the next morning and that an expanded, leadership‑approved analysis could be useful but must be tightly scoped.

Ending: The committee paused formal action and moved to the next agenda items; the work session served to give senators context on modeling choices and the limits of fiscal notes before the scheduled bill hearing.