Gazette opinion: Bullock’s bonding proposal won’t fly

2014-04-24T00:00:00Z Gazette opinion: Bullock’s bonding proposal won’t fly The Billings Gazette
April 24, 2014 12:00 am

Gov. Steve Bullock’s latest aid package for Eastern Montana elicited as much disappointment as relief last week.

Yes, Culbertson and other Montana communities with infrastructure projects underway will benefit from Bullock reducing the interest rate on a state loan program. Yes, the offer of immediate technical expertise for land use planning, affordable housing development and grant writing is welcome in small cities with few or no employees to do that work.

However, his proposal for $45 million in sewer and water grants is unrealistic. As he did during the 2013 Legislature, Bullock proposes that the state issue bonds to fund grants to Eastern Montana. Bonding is a steep challenge in any Legislature; state law requires bond issue approval by two-thirds of the lawmakers in both chambers. Many lawmakers, especially Republicans, have opposed the state issuing debt for anything. No major bonding bills passed the 2011 or 2013 sessions.

Bullock has insisted on maintaining a sizable ending General Fund balance. He said that was the reason he vetoed some end-of-the-session spending bills, including House Bill 218, which would have spent $35 million on grants to oil-impact communities.

According to a March 31 report, the Legislative Fiscal Analyst projects the state will end this fiscal year (June 30) with a General Fund balance of $385.4 million and end the next fiscal year with $352.9 million in the state checking account.

The state could spend $35 million as HB218 proposed or use cash for $45 million in sewer and water grants and still have more than $300 million on hand, according to the latest fiscal projections.

State cash grants would be only one part of the aid package Eastern Montana needs. The costs of expanding sewer, water, roads and public safety services in the area impacted by oil and gas development will be at least several times $45 million. The grants could help leverage federal aid, local bonds and local fee or tax increases.

Cities are particularly hard hit because they don’t receive oil royalties that go to counties where oil is produced. More equitable distribution of oil and gas proceeds is another issue that warrants legislative action.

Ankney prefers cash

Rep. Duane Ankney, R-Colstrip, chairman of the House Appropriations Committee and sponsor of HB218, is confident that another bill proposing to appropriate cash for Eastern Montana projects will be introduced to the 2015 Legislature.

“I don’t see this bonding passing,” Ankney told The Gazette Wednesday. “That infrastructure up there needs attention. It’s no secret I prefer to do it with cash.”

Ankney said state grants are “kind of like fertilizer to grow the big money.”

“The needs are probably up around $200 million,” Ankney said. “Those folks up there are going to end up paying for a lot of this themselves.”

The governor should consider how his bonding proposal would affect the rest of the state — in the unlikely event that it passed the Legislature. Then all Montana taxpayers would be paying off bonds for up to 20 years, paying principal and interest on borrowed money used to expand sewer and water services in Eastern Montana in 2015. It makes more sense to avoid the cost of borrowing and use available cash to help address the urgent infrastructure needs of this relatively small area.

Governor’s challenge

To his credit, Bullock recognizes that Eastern Montana needs help:

“Soaring prices, inadequate infrastructure, and a massive influx of new residents is vexing local governments like never before,” Bullock said in announcing his Eastern Montana Infrastructure Project. “Some of these challenges require solutions that can be handled at the local level, but many of them require help and resources from the state.”

If Bullock is committed to helping Eastern Montana, as he said, he needs to reach out to Republican and Democratic lawmakers to craft a fiscally responsible grant proposal that actually can pass the Legislature.

Copyright 2014 The Billings Gazette. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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