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February 24, 2023
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 comparative 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 this 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.
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.”
House Bill 359, which would ban drag performance in public spaces including schools and libraries when minors are present, sailed through the House Friday in a 64-32 vote. During the floor debate Thursday, Republicans described the bill, sponsored by Rep. Braxton Mitchell, R-Columbia Falls, as a measure to protect children from adult performances, with several equating drag to stripping and other sexual displays. Democrats tried to puncture that narrative, with Rep. Zooey Zephyr, D-Missoula, describing drag performance as a celebratory and empowering part of LGBTQ culture. If Republicans had attended an all-ages performance in Helena last weekend, Zephyr said, “what you would have seen is people in full-length dresses, in beautiful gowns, celebrating our art, our history, and the fact that we’re alive today.” The bill will now proceed to the Senate for consideration.
House Bill 337, which would have encouraged housing construction by forcing cities to allow building on smaller lots, failed on a 6-10 vote by the House Local Government Committee Thursday evening. Sponsored by Rep. Katie Zolnikov, R-Billings, the measure had been seen by market-focused housing advocates as testing the waters for how sympathetic that committee will be to zoning reforms that override local government control in an effort to ease Montana’s housing crunch.
Senate Bill 245, another zoning reform push, passed the Senate Local Government Committee 8-1 earlier this month and passed the Senate on a 40-10 vote Friday. Sponsored by Sen. Daniel Zolnikov, R-Billings, SB 245 would require cities to permit apartment complexes and mixed-use buildings in areas currently zoned for commercial use.
The Way Things Work
Montana’s work-in-progress budget for the 2024-2025 biennium passed a wonky milestone this week as work by the Legislature’s appropriations committees progressed far enough for fiscal analysts to publish the session’s first General Fund status sheet.
The status sheet, which will be revised and republished periodically through the remainder of the session, is one of the main tools lawmakers use to ensure that the hundreds of bills under active consideration in the Capitol will produce the balanced budget required by the state Constitution.
The document includes an agency-by-agency breakdown of General Fund spending in the state’s main budget bill, House Bill 2, detailing how the current budget bill compares to the proposal put forward last fall by Gov. Greg Gianforte. It also lists other live bills with budget impact — more than 100 at the current count — and sums their cumulative effect on the state’s finances.
Here are the key stats:
- $4.2 billion — Agency spending that would be authorized over the next two years by the Legislature’s working draft of House Bill 2. That’s 0.1% below the governor’s proposal.
- $1.9 billion — Total amount of new spending and tax cuts proposed by other live bills.
- $2.2 billion — The projected balance at the end of the fiscal year 2025.
- $558 million — The amount by which revenues exceed proposed spending in fiscal year 2025.
Some caveats: First, note that these figures are specific only to the state General Fund, and don’t include special-purpose funding streams or federal dollars administered by state agencies.
Also, in an effort to avoid cluttering the list with bills that are unlikely to pass, the Legislative Fiscal Division employs strict rules for deciding what to include on its budget impact list. Generally, pending bills that have advanced out of their first legislative committee and haven’t been voted down or tabled make the list, though analysts exclude some bills awaiting appropriations committee review after passing an initial floor vote.
That means this week’s list includes some of the big-ticket legislation working its way through the Legislature, such as GOP-supported tax rebates and the governor’s signature income tax cut. But it also means the initial list excludes at least one major spending measure in the mix: House Bill 226, which would put $300 million toward shoring up state pension plans (that bill passed a House Appropriations Committee vote Thursday, after the initial status sheet was published).
Additionally, there’s still time for lawmakers to add new spending measures to the mix. Budget bills can be introduced until March 28 and have until April 3 to clear their first chamber of the Legislature.
Read the full status sheet here.
Democrats and 19 Republicans joined together Friday to narrowly kill House Bill 464, legislation sponsored by Rep. Paul Fielder, R-Thompson Falls, that would have allowed judicial candidates to declare partisan affiliations. It’s one of several bills in either chamber this session to either mandate or allow judicial candidates to do so.
The Game is Afoot
House Bill 332, sponsored by Rep. David Bedey, R-Hamilton, was tabled Friday by the House Appropriations Committee on a 13-10 vote. The bill proposed investing $60 million in one-time funds to establish a statewide health insurance trust for public school employees.
Bedey and other supporters, including the Montana School Boards Association, argued that such a trust would help drive down costs for struggling districts and increase take-home pay for teachers.
However, two Republican lawmakers expressed concern over the level of funding requested and the amount of time — five years — that participating districts would be required to stick with the trust before being able to withdraw. Speaking with Capitolized Friday, Bedey said the final vote tally was unexpected, particularly given the broad bipartisan support for HB 332 on the House floor earlier in the week.
“What most surprised me was the Democrats who voted against it,” Bedey said. “They didn’t speak against the bill, so I’m flabbergasted.”
Several Democrats on the committee joined with Republican hardliners in voting against the proposal, a sign the minority party has turned to hardball negotiations as budget talks heat up. Several Democrats have told Capitolized they realize that the Republican caucus, despite its dominant majority, has internal schisms. And while minority-party Democrats have historically sided with comparatively moderate GOP lawmakers on big-ticket policy goals, they’ve said they don’t have to lend their votes to the majority if they feel they’re not getting anything in return.
Other bills, including Senate Bill 47, a proposal to bring the state’s commercial drivers license regulations in line with federal requirements; House Bill 321, a conservation district and school funding bill; and House Bill 402, another Bedey measure concerning voter citizenship requirements, have faced similar fates at the hands of unconventional bipartisan coalitions, whether on the floor or in committee.
“I think the folks in appropriations are taking up some space right now on proposals because we have priorities,” House Minority Leader Kim Abbott, D-Helena, told reporters at a press conference Friday. “If people are expecting our votes to move priorities, even if we like them, we need our priorities funded too. We have good ideas in this building, and we want to see them get fair hearings. We want to see them move.”
Abbott listed increased health care provider rates and a “serious investment in housing” as Democratic priorities that the caucus wants to push.
While HB 332 has been tabled, there are still procedural opportunities to revive it and other stalled measures should enough lawmakers agree to do so. Abbott suggested as much in the press conference.
“You guys know that tabling bills is often a temporary thing,” she said.
Bedey said he couldn’t speculate about the individual motivations of Democrats on the appropriations committee, but said he suspects the “anomalous votes” in committee and on the floor this week are due to “internal political machinations” designed to gain some advantage.
“I don’t think that the votes you see here reflect careful analysis of policy,” he said. “I think that they’re expressions of political maneuvering. And there’s a lot of reasons for that, and this is politics and this is Helena, and this time in the session right before transmittal is a time when those sorts of things tend to happen.”
—Arren Kimbel-Sannit, Alex Sakariassen, and Eric Dietrich
Heard in the Halls
“We don’t need United Nations Agenda 21 density planning from the Montana Senate. We need to let the people of Montana enjoy the value of their home based on the zoning from when they bought it, not for when we thought we had a crisis that we could solve on their backs.”
—Sen. Brad Molnar, R-Laurel, during debate this week on Senate Bill 245. The proposal, which passed on second reading Thursday, would require cities with populations over 7,000 to permit apartment complexes and mixed-use buildings in areas currently zoned for commercial use.
The flow of the coal severance tax trust fund
How to spend a $2.5 billion surplus? Lawmakers have no shortage of ideas: This story goes deep into the fight over Montana’s budget surplus. (MTFP)