Institute for Tourism and Recreation Research

Report Number: Technical Completion Report 98-2
Authors: Kristin Aldred Cheek and Rita Black
Month Published: June 1998

Typically, data regarding nonresident travel in Montana have been reported as "stand-alone" figures. That is, the dollar figures associated with nonresident travel have not been reported in terms of their role in the state’s economy. Recently, as Montanans have been engaged in discussions about the changing nature of the state’s economy and the role of various industries, the need to better understand nonresident travel’s significance has become very clear. This paper is an attempt to add to the understanding of the role of nonresident travel by putting nonresident travel impacts—including jobs, income, and taxes—into the context of Montana’s overall economy. It also includes an estimate of the impacts from a hypothetical change in nonresident visitor spending.

Existing data from IMPLAN (an economic input-output software program and database), various state agencies (for tax information), ITRR nonresident surveys, and other sources were used to compile estimates of nonresident travel’s income, employment, and tax impacts. Nonresident travel data are presented for the years 1991 to 1996.

30,800 jobs (6 percent of all jobs in the state);
$400 million in employee compensation (4% of state total);
$56 million in proprietor’s income (income of self-employed persons) (3% of state total); and
$135 million in other property income (industries’ dividends, interest, rent, and profits) (2½% of state total).

The relative "size" of the economic activity associated with nonresident travel varies according to the measure being used (e.g., employment, various types of income). Nonresident travel is similar to agriculture in employment levels and similar to wood and paper products manufacturing in terms of total income (employee compensation, plus proprietor’s income, plus other property income).

A 15 percent drop in nonresident travel expenditures (using 1996 figures as a starting point) could result in the direct loss of approximately:

4,600 jobs;
$70 million in personal income (employee compensation plus proprietor’s income); and

$20 million in other property income.

There would also be additional impacts from indirect and induced spending associated with such a change. Accounting for these additional impacts, the total impacts from a 15 percent decrease in nonresident travel expenditures would be approximately:

In 1996, nonresident visitors (not including people traveling in commercial trucks or commercially-marked vehicles):

Paid approximately $60.2 million in gasoline and diesel taxes (35% of total state gasoline and diesel taxes);
Generated an estimated $52.5 million in state and local taxes, which were paid by the businesses and employees supported directly by nonresident travelers’ expenditures; and
Paid additional accommodations, alcohol, cigarette, and other excise taxes.

In total, nonresident travel’s contribution to state and local taxes is estimated to be more than $113 million, or more than 7% of all state and local taxes.

Nonresident visitor expenditures represent new dollars to the state economy, and are an important element of Montana’s economy.
The activity associated with nonresident travel adds diversity to the economy.
The figures for nonresident travel, in the context of all sectors of the economy, show that nonresident travel is an important part of state's economy, on par with agriculture in terms of jobs and wood and paper products in terms of total income.
The estimated tax figures suggest nonresident travelers contribute substantially to state and local taxes, generating a share of taxes disproportionately larger than its share of income or employment.