Eric Dietrich

A hay field outside Utica, Montana

Kansas and Vermont pay college grads to move to small towns. Montana could follow suit.

At a time when rural regions across the U.S. are struggling to attract young professionals, the states of Kansas and Vermont have used public dollars to fight “brain drain” by offering grants and tax breaks to professional workers who settle in small towns.

If an eastern Montana lawmaker has his way, Montana could soon follow suit.

Rep. Joel Krautter, R-Sidney, has introduced House Bill 405, which would offer recent college graduates between $5,000 and $15,000 apiece if they commit to living and working in a qualifying county for five years. The bill would also offer grantees a property tax credit of up to $2,000 a year for five years.

The grant amount would depend on a worker’s education level, with recipients holding advanced degrees eligible for the full $15,000, bachelor’s degree-holders eligible for $10,000, and graduates of two-year programs or apprenticeships eligible for the $5,000 grants. The program would focus on counties with fewer than 15,000 residents, but partial grants would be available to workers committing to more populous parts of the state.

Krautter calls the legislation the Catch and Keep Act, and said it’s designed to encourage grads to settle in communities where employers have a hard time finding qualified workers for health-care, education, and accounting jobs. He said he’s frustrated that Montana’s economic growth has tended to cluster in cities.

“I want economic prosperity throughout the state,” he said. “We need skilled people in rural Montana to keep our communities together and vibrant.”

Montana’s overall population is growing, but many of the state’s rural areas, in eastern and central Montana especially, have seen long-term population declines. An analysis of census data indicates that of Montana’s 56 counties, 19 have seen their population shrink by at least 5 percent since 1990.

Montana Legislature

Joel Krautter, R-Sidney

If the state doesn’t reverse those demographic trends, Krautter said, he worries about a “snowball effect,” where the sense that small towns are in decline becomes a self-fulfilling prophecy as younger college-educated people are discouraged from moving to them or sticking around long-term.

His proposal, which would pay out roughly 100 annual grants and cost about $1 million per year, had its initial hearing in front of the House Business and Labor Committee March 11. It was supported by several professional groups and trade associations. No one testified in opposition.

“House Bill 405, we feel, does fit into this larger context of attracting businesses and employees to Montana,” said Montana Chamber of Commerce lobbyist Bridger Mahlum.

Even so, as one of 60-plus spending bills jostling for state funding at a time when the Legislature’s Republican majority has expressed little interest in raising taxes, the bill faces an uphill climb.

The proposal raises a bigger policy question, too: Can paying young professionals to move to small towns actually help reverse rural decline?

The state officials who administer Kansas’ Rural Opportunity Zones program say the answer is yes.

The Kansas opportunity zones program, created in 2011, offers college graduates as much as $15,000 over five years to help repay student loans when they move to designated rural counties, with funding coming from a combination of state and local money. New Kansas residents coming from out of state also qualify for full income tax waivers for up to five years.

According to the Kansas Department of Commerce, more than 600 people participated in the student loan repayment program in 2017. About half the people who signed up for the program stayed in their rural county for the full five-year term of the program, and then stayed for at least another year afterward.

“It’s done what it’s supposed to do,” said Rachéll Rowand, a program manager with the Kansas Department of Commerce. “It’s brought a lot of people into the state.”

However, census data doesn’t indicate that the incentives have been enough to single-handedly create a demographic turnaround. All but two of the 40 rural Kansas counties that initially signed on for the program lost residents between the 2000 and 2010 censuses. With the program in place between 2012 and 2017, only five of the 40 saw their population estimates rise — and then only modestly. Combined, the counties lost nearly 5,600 residents over that five-year period, an average decline of 3.2 percent.

The rural opportunity zones program isn’t a cure-all solution, Rowand acknowledged. But, she said, “It’s one tool in what has to be a much larger toolbox.”

A 2017 survey, conducted as part of a master’s project, asked several hundred Kansas State University students whether they were interested in the program, and recorded lackluster results — in part because few students were aware the program existed. Job opportunity outside of agriculture was also seen as a barrier. While 81 percent said they viewed rural Kansas as a good place to raise families, only 28 percent said they considered participation in the program compatible with their career plans.

“Even though the ROZ program does not place any occupational or other restrictions on participants, the program is naturally more suited to those whose future goals are
achievable in rural Kansas,” wrote researcher Matthew Brooks.

Vermont, the 624,000-resident New England state where U.S. Sen. Bernie Sanders built his political career, doesn’t have much in common with Kansas. But its lawmakers have also fretted over thinning rural populations. In a move that drew national media attention last year, the state created a program that reimburses telecommuting workers who move to the state up to $10,000 in moving expenses.

While the Vermont measure was a phenomenal marketing success — it attracted more than 1 billion “media impressions,” according to a state official quoted by Burlington’s Seven Days newspaper — its modest funding allocation of half a million dollars over three years is enough to supply no more than 50 grants at the $10,000 level.

According to news site VTDigger, Vermont Gov. Phil Scott said in January that he wants to expand the program, setting aside another $1 million dollars annually to pay workers who move to Vermont up to $5,000 apiece whether they work remotely or take a job with a local company.

Vermont’s government also runs a Stay to Stay Weekends program that encourages “exploratory vacations” for people who are thinking about a move to the state. Participants book their own accommodations for a long weekend and spend a day or two skiing or touring the region. They’re also matched with a chamber of commerce welcome reception and meetings with potential employers.

Krautter says his Montana proposal is intended to improve on the Kansas and Vermont models, recognizing, for example, that it makes sense to target incentives to Montana college graduates and others who already have some connection to the state and might be nudged into building a career in a small town.

Krautter himself is an example: a Deer Lodge native who attended college out of state and then studied law at the University of Montana in Missoula before joining a law firm in Sidney during the Bakken oil boom. The sense of small-town community that comes with living four hours from Billings has helped keep him there, he said.

“Eastern Montana has its own unique beauty to it, with the badlands,” he said.

“I recognize this isn’t going to appeal to everyone,” he said. “If you want to live in Denver, Colorado, you’re going to live in Denver, Colorado. But I still think — Montanans, we care about each other. And if one area is struggling, we shouldn’t just abandon it and write it off. We should look for solutions.”

He’s open to other ideas, Krautter added, but hopes his catch-and-keep bill at least starts a conversation.

“It’s just about having something that’s available to people who are weighing their options,” he said.


UPDATE, March 11: This story has been updated with material from the bill’s initial hearing.

Story edited by Brad Tyer.

This story is published by Montana Free Press as part of the Long Streets Project. This work is supported in part by a grant from the Greater Montana Foundation, which encourages communication on issues, trends, and values of importance to Montanans. Reach Lead Reporter Eric Dietrich at [email protected]