Bullock's infrastructure plan includes $208M in bonds

HELENA — A proposal by Montana Gov. Steve Bullock calls for $440 million in infrastructure projects across the state, including rural water projects, dam upgrades, a state museum and new university buildings.

As the Legislature meets this winter and spring, one of lawmakers’ chief tasks is deciding how much of that request the governor — and Montana communities — will get. The infrastructure package comes in addition to Bullock’s proposal for state agency spending, which, including federally funded programs, totals $6.6 billion in fiscal year 2020.

With the Democratic governor proposing to cover nearly half the infrastructure proposal with bonding, large portions are likely to face a chilly reception from fiscal conservatives who’ve blocked bonding measures in recent sessions. Some GOP lawmakers, however, say they have a plan in the works to improve the process and fund worthy projects.

The governor’s proposal includes rural infrastructure projects across the state. Examples include a $479,000 grant to help the town of Hot Springs drill new water wells and $725,000 to help the town of Baker revamp its water mains. When it comes to buildings, though, most of the work is slated for the state capital of Helena and the fast-growing Montana State University campus in Bozeman.

In addition to $5 million in maintenance for the state Capitol complex and a $1.9 million renovation of the governor’s residence after Bullock leaves office in 2021; the proposal includes $32.1 million for a long-planned Montana Heritage Center Museum in Helena. That project would give the Montana Historical Society new space to store and showcase its collections.

In Bozeman, Bullock has endorsed Montana State University’s $32 million request for a legislative appropriation to renovate its historic Romney Hall into additional classroom space — a request lawmakers have denied the past four legislative sessions. The university also wants legislators to authorize $37.5 million in Bozeman projects it plans to fund with money it has raised from other sources, including upgrades to the campus library and a planned $12 million American Indian Hall. That spending requires approval from the Legislature even though it doesn’t involve a request for state money.

Where the money comes from

Slightly more than half of Bullock’s $440 million proposal would be funded with cash: $232 million in banked state money, separately held university funds, or federal funds. The state would issue bonds for the remaining $208 million.

The sources of infrastructure cash vary, though much of it would come from accounts filled directly or indirectly with revenue from Montana coal-tax collections. For example, the state’s Long-Range Building Program, used to build and upgrade state buildings, received $7.2 million in coal-tax revenues in 2018, according to the Legislative Fiscal Division.

Another infrastructure program, the Treasure State Endowment Program, is supported by interest earned from coal-tax revenues that have been invested in the state’s coal trust fund. That interest is used to help towns and counties pay for projects that include water system upgrades and bridge replacements.

Where the state doesn’t have enough available cash to cover the governor’s projects, Bullock proposes borrowing, meaning the state would issue bonds to be repaid over time. Big-ticket projects such as Romney Hall and the Montana Heritage Center Museum are proposed as bonded items. Bullock is also proposing to take on debt for a new $44.2 million Delivering Local Assistance grant program, which would make money available to small towns trying to cope with growing or declining natural-resource activity.

The bulk of the debt proposed in the governor’s infrastructure plan would be structured as general obligation bonds, to be repaid from a variety of sources including the state general fund.

Bonding, however, has made for tricky politics in recent legislative sessions. Under the Montana Constitution, lawmakers must pass debt bills by two-thirds majorities in both the House and Senate, and three-quarters majorities are required for bills that borrow against the coal trust fund.

Bonding bills have been voted down in each of the three prior sessions, in 2013, 2015 and 2017, as the Democratic governor and Republican legislative majorities clashed over which projects to prioritize and how much debt the state should take on.

This year, Republicans and Democrats working on infrastructure policy say they’re optimistic about the chances that cash-based infrastructure measures — House Bills 5, 6, 7, 10, and 11 — will pass through the process largely intact. Again, though, the bonding bills — House Bills 8 and 14 — will likely face a more difficult journey.

What the GOP is planning

GOP lawmakers in the legislative majority say they’re preparing their own infrastructure proposal that combines their own pared-back version of HB 14 with a policy framework designed to make it easier for the state to successfully pass infrastructure legislation in future sessions.

“Hopefully this is the last year we’ll need a traditional infrastructure bill like the ones we saw in 2013, 2015, and 2017,” said Rep. Eric Moore, R-Miles City, in an interview for the Montana Free Press’ Lowdown podcast.

The idea, Moore and other GOP lawmakers say, is to agree on a target for what level of infrastructure debt is reasonable and then have a consistent policy for deciding what new projects should be on the list.

“Debt in and of itself isn’t evil — it’s the level,” Moore said.

Moore also said he expects Montana State University’s Romney Hall to be included in the initial GOP version of the bonding bill. The Montana Historical Society’s request for a new museum building will likely not be, he said. He said Jan. 25 that the text of the GOP plan would be available in the next week or two.

“We have a lot of projects to get done in the state, and we want to create a fiscal framework around them that sets us up with an actual plan,” said Rep. Mike Hopkins, R-Missoula, who chairs the House Joint Appropriations Subcommittee on long-range planning.

Rep. Ryan Lynch, D-Butte, said legislative Democrats are “committed to the conversation,” but also pointed to what he called the immediate need for infrastructure project funding.

“There are projects in front of the Legislature that they need to act on,” Lynch said. “There are demands in the communities, both urban and rural, and I think the package of bills Gov. Bullock has put forward presents a solution.”

Eric Dietrich is a journalist and data designer based in Helena. He is the lead reporter on the Long Streets Project and also covers state policy for Montana Free Press.