Bill would authorize state loans for local projects using coal-severance tax
Mandy Nay says she and her neighbors in far eastern Montana need clean water, not the brown stuff that comes out of their faucets right now. Nay is the project coordinator for the Dry-Redwater project. After more than a decade of working toward their goal, the group is planning to place a water treatment plant on the North Fork of the Fort Peck Reservoir to get water to the area between McCone and Richland counties. They say they’ll be able to get clean water to about 11 communities -- nine of which don’t have any form of water system right now.
“Generally speaking, those living in our area do not have water in their homes that will sustain life. They have to haul everything. Even the cows won't drink it, guys. It's gross,” Nay said.
The Dry-Redwater project is just one of the projects a panel of lawmakers heard about Monday that aims to expand and improve infrastructure across Montana. Some of the projects are funded by grants, and some by loans from the state. But they all have one thing in common -- they’re backed by coal money.
Republican Rep. Mike Hopkins, R-Missoula, is the sponsor of House Bill 8, the bill that would authorize state loans for local projects and use the coal-severance tax, or taxes collected on coal mined in Montana, to back those loans.
“When you're looking at House Bill 8, you are in a way, literally looking at the building of the future of Montana,” Hopkins said.
The coal severance loan program has been around since the 1980s. Anna Miller with the Department of Natural Resources says the backing from the coal severance loan program provides the state security. But, she said, no one has ever defaulted on their loans.
The bill would allow the Department of Natural Resources and Conservation to sell bonds so they can then loan money to communities to help pay for new or upgraded infrastructure. The coal severance tax money would back that up. So, if the projects can’t make payments on their loans for a few years, the state can take money from the coal severance pool and (literally) buy itself some time.
“So that bond fund will pick up that debt service payment until those repayments start coming in. So we issue the bond, it's for 10 years. For the first year, we take money out of that coal tax bond fund, but then we give the money to the users and they repay us over 10 years,” Miller said.
The program would fund projects that would bring cleaner water to small towns in eastern, northern, and central Montana and repair the East Fork and Painted Rocks dams. The committee also heard testimony on House Bill 11, which would provide grants to some of the same projects receiving loans from HB 8.
If passed, HB 8 would fund almost $89 million in projects throughout Montana. There were no opponents of the bill.
The committee did not take immediate action on the bill.
Elinor Smith is a reporter with the UM Legislative News Service, a partnership of the University of Montana School of Journalism, the Montana Broadcasters Association, the Montana Newspaper Association and the Greater Montana Foundation.