LOS ANGELES — A Montana legislator has introduced a bill that would divert some interest earned from the Coal Severance Tax Trust fund into an infrastructure fund.
Under Senate Bill 88, introduced in the Senate Finance and Claims Committee by Sen. Jon Sesso, D-Butte, Tuesday, it would take five years for the Build Montana fund to accrue the $50 million principal needed to use money from the escrow fund for infrastructure projects.
"The bill is the first of many bills coming before us in 2017 – some designed to create long-term sources of dollars and others to deal with current needs," Sesso said. "As you know, the current needs will not be met with current dollars with or without bond funding. There are many projects and simply not enough money."
The proposed infrastructure fund would be financed with 75% of the revenue from the state's severance tax on coal that goes into the coal trust fund, which currently holds $958 million. At present, Montana's severance tax collections are split equally between the coal fund and the general revenue fund.
The bill doesn't delineate the infrastructure projects for which the money would be used though road and water projects were mentioned as areas of great need during the hearing. The American Society of Civil Engineers has estimated that the state needs to spend a combined $24.8 billion on road and water projects over the next 20 years.
A similar system was used for the Treasure State Endowment Program created in 1996 to fund some local water, sewer and bridge projects. The fund diversion under that program expired last year. This measure would redirect the same money that had been used to build that program to establish a new one for other types of infrastructure projects.
A similar bill was introduced during the 2015 biennium, but failed by one vote in the House.
Montana Gov. Steve Bullock, a Democrat, supports the bill. Though his budget director, Dan Villa, said everyone needs to be aware of the implications of further shrinking the permanent trust and to consider the big picture since other bills have been introduced that would tap into the trust fund.
Several others spoke in favor of the bill and no one spoke in opposition.
Sen. Mike Phillips, D-Bozeman, asked Sesso whether it was a good idea to plan infrastructure funding around coal revenue when it may continue to be a volatile resource.
"I don't have that concern," Sesso said. "I think we will be burning coal in Montana for a long time. It will be subject to the same commodity price issues it has in the past, but if you have a better revenue source I am all ears."
Sesso added that this has been a tried and true approach for infrastructure development.
The committee postponed a vote on SB 88 until other infrastructure proposals have been heard.
