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A proposal to invest $2 billion from the state’s General Fund into the coal severance tax trust fund is gaining traction ahead of a hearing next week, receiving a nod from Democratic legislative leadership and attracting an unconventional assortment of lawmakers from both parties — and across intra-party factions in the GOP — as co-sponsors.
“The coal trust fund is in the Constitution. It’s been a good idea for 50 years. And so why aren’t we looking back to a program and a resource and an asset that we know is a good idea to pay it forward for the next 50 years,” said the sponsor of Senate Bill 346, Sen. Ryan Lynch, D-Butte, who’s been telling people to “trust the trust.”
Money in the coal trust is invested, generating interest that flows to uses including water and sewer projects, job creation grants and public school facilities. More than $1 billion sits in the trust currently.
“When you look at all of the buckets, it’s for infrastructure grants, it’s for planning grants, it’s for water, it’s for wastewater,” Lynch said. “It touches all facets of Montana and it touches all corners of Montana. And I would challenge anybody to argue that the coal trust fund is a bad idea.”
The bill’s more than 40 cosponsors include House Minority Leader Kim Abbott, D-Helena, and numerous other Democrats in both chambers along with more than a dozen Republicans, from comparative moderates like Sen. Jeff Welborn, R-Dillon, to relative hardliners like Rep. Braxton Mitchell, R-Columbia Falls. Rep. Amy Regier, R-Kalispell, the sister of House Speaker Matt Regier, is also signed on.
As budget talks heat up, the proposal has caught the attention of Republican legislative leadership and officials in the governor’s office, but not necessarily because they’re on board. As the state is preparing its two-year operating budget, it’s sitting on an estimated $2.5 billion budget surplus in the bank. The dozens of spending, tax rebate and tax cut bills advancing at the Legislature total roughly $2 billion over the biennium. Lynch’s $2 billion bill, should it pass, would conflict with the ambitions expressed in those bills.
“I can speak for leadership. We don’t support the bill,” said Senate Majority Leader Steve Fitzpatrick, R-Great Falls. “It’s $2 billion, which means we won’t be able to do things like fund the tax rebates. It would prevent us from doing things that are good policy, like front-loading the gas tax accounts. My view is there’s nothing wrong with saving money … but when you have pressing immediate needs, you know, those need to be taken care of. And we do have pressing immediate needs.”
Matt Regier, the House Speaker, was a little more circumspect, referring to the bill as one option among many for spending down the state’s surplus — though he expressed doubt that the bill would pass with a full $2 billion allocation.
Several lawmakers sponsoring the bill have already voted for priorities that would likely conflict with the coal trust allocation, like what’s come to be known as the six- (or sometimes eight-) pack: a series of GOP-backed tax rebates, tax cuts and other spending measures. And Democrats have their own $1 billion plan to tap the surplus for investments in affordable housing, childcare, health care reimbursement rates, progressive tax relief, rebates for renters and more.
The bill could also eat up funds that the governor has set aside in his recommended budget, like a $190 million income tax cut. Gianforte avoided saying anything definitive on the bill when asked in a press conference last week.
That’s led some skeptics of the coal trust bill to guess that it’s more about creating negotiating tools for lawmakers who aren’t getting their budget priorities met than about investing money in the trust.
“It’s being used more for leverage than reality. It’s offering an option,” said Rep. Llew Jones, R-Conrad, the House Appropriations Committee Chair. “This would be saying, look, we don’t have to spend money, we can just put it in the trust.”
For members of the GOP’s right wing, the strategy would be to use the bill as a bargaining chip to get more direct tax rebates and minimize ongoing spending.
“It’s my understanding the reason they’re doing this is they want more money for rebates,” Fitzpatrick said.
“Basically we put that bill up because we feel that there is revenue surplus money that is being directed in ways that maybe are not conducive to a conservative thought process,” said Sen. Dan Bartel, R-Lewistown, a cosponsor. “So we just put the bill up and we put a $2 billion price tag on it and allow the legislators to have an option.”
As to whether it becomes a source of leverage, “time will tell,” he said.
Democrats, meanwhile, have seen legislative leadership put the kibosh on several of their plans, like a long-term property tax relief bill from Rep. Jonathan Karlen, D-Missoula. They’ve attacked the GOP’s rebate plans as rushed, irresponsible and regressive. Investments that Republicans have proposed to address the state’s needs, Democrats have criticized as insufficient.
The coal trust plan, on the contrary, “is an example of being careful and conservative with the people’s money,” Abbott said.
Lynch insists his bill is simply a good idea. As the appropriations process plays out, he said, he believes there’s room in the budget for his coal-trust booster as well as Democrats’ investment priorities.
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The bills would also cut the state business equipment tax, cut capital gains taxes, pay down state debt and allocate $100 million to a highway construction fund.
Welborn acknowledged supporting the eight-pack, but said every constituent he’s talked to says it’s a good idea to invest surplus money in savings.
“Is there any project that stands on its own that is doing as much benefit over the long haul to the people in Montana as an idea like this that saves that money and does so in a very safe manner, in a transparent manner or something that will pass the test regardless of who is on the second floor?” Welborn said.
The bill languished after introduction for a week without a scheduled hearing. That just changed — it’s now headed for a hearing in the Senate Local Government Committee on Feb. 27. To stay alive, it’ll have to pass out of committee and win approval in the Senate before the transmittal deadline on March 3 — a tall order.
Lynch took note of the committee referral.
“It has nothing to do with local gov,” he said in a text. “They’re trying to get one over on me.”
Abbott has a theory why the bill has taken so long to move: Leadership doesn’t want the bill to pass, but thinks the number of Republican lawmakers supporting it might allow it to, so they’ve delayed a hearing to create an untenable deadline.
“I think it might have to do with how many Republican cosponsors it has,” she said. “I think it’ll pass out of the Senate.”
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