As mayors of communities directly impacted by oil and gas development in the Bakken, we know firsthand of the infrastructure needs our communities face. And we know of the incredible opportunity that the state of Montana has to use our stellar bond ratings to make significant investments in sewer and water infrastructure.
That’s why we are thankful that Gov. Steve Bullock has presented a plan to pump $45 million into infrastructure projects across our oil and gas producing counties to help address the impacts of development, while also implementing an immediate reduction in the State Revolving Fund interest rate for construction projects, saving local governments millions.
Bullock’s plan also will provide local governments access to expert technical assistance in the areas of land use planning, affordable housing and grant application processing.
The state should not shelve our well-earned bond rating, which provides access to historically low interest rates, and pay cash for these needed projects.
We built the Metra using bonds issued by Yellowstone County. The Sidney Community Hospital and the Glendive Medical Center were built the same way. There are countless libraries, schools, hospitals and other public buildings across our region which we’ve paid for by issuing bonds. They add to the incredible quality of life we have.
Borrowing at 2.5%
While it may seem that paying cash for infrastructure improvements saves money, in reality, it costs Montana more in the long run. Here’s why: Montana has a sterling bond rating, which means the state is able to borrow money at a rate of roughly 2.5 percent. At the same time, the state has an incredible track record by making smart investments, returning approximately 13 percent this year alone. So, spending a dollar saves us 2.5 percent in interest payments, but costs us 13 percent in potential investment income – a net loss of 10.5 percent overall.
Bonding is how long-term infrastructure investments are generally made by Montana cities and counties, as well as most municipalities across the country. It’s worth noting that it’s how the Montana Legislature does it too.
The Gazette editorial board may have inadvertently overlooked a bipartisan measure in the last legislative session which issued bonds to include renovations to Ruby Dam and improvements to the Sunset Irrigation District (HB8, 2013 session). That measure is pumping millions into our economy. In fact, since 1999, the Legislature has passed in excess of $130 million in bonding for investments in capital improvements just like the one Bullock is offering now.
Bonding is not a partisan issue; it’s about building infrastructure for our cities, our counties, and the state of Montana in a fiscally responsible manner.
As mayors of cities in desperate need of both assistance for our infrastructure needs, and a state government that responsibly manages its finances, we recognize that people in Eastern Montana are hurting and this is the time that we should be working together to find common-sense, nonpartisan solutions to our challenges. We appreciate the assistance from Bullock, and we hope our legislators will take him up on it.