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HELENA — Republican governor candidate Rick Hill on Wednesday proposed using the state’s share of oil, gas and coal revenues to partly change how K-12 schools are funded and reduce property taxes.

Hill, a former congressman, announced the plan before the Montana Taxpayers Association.

If elected Hill said he would propose using the state’s share of oil and gas revenue, plus the state share of lease and royalty revenues from coal development, to directly fund education by shifting some of school funding away from property taxes. The first installment would be a $200 million property tax cut in the 2013-2015 biennium, he said.

“My plan is to provide permanent property tax relief for all Montanans by using the revenue from our expanding natural resource development to change how we fund education,” Hill said. “As oil, gas and coal revenues increase, Montanans will see lower property taxes and we can continue to increase funding to our schools.”

Hill said he hasn’t decided yet on all the details of the proposal and wants to confer with legislators.

The options are to use the natural resource revenue to partly replace property taxes raised for K-12 schools through the 95 statewide property tax mills, the permissive school mills or the guaranteed tax base.

Hill took a shot at his Democratic opponent, Attorney General Steve Bullock, who in June proposed giving Montana homeowners living in their own primary residence each a one-time $400 rebate. The plan would cost $100 million.

“Montanans deserve more than election year gimmicks or a one-time property tax rebate of $400,” Hill said. “My proposal will bring meaningful and substantial property tax relief to homeowners and small businesses in Montana.”

Hill released the plan as part of a series of ideas under the heading of “Revitalizing Montana Education.”

Another idea was to create a school and infrastructure plan through what he called a “Montana Coal for Montana Communities Initiative.”

Hill called for placing a referendum on the ballot to allow Montanans to cap the state’s coal tax trust fund for 10 years. Funds that would have gone into the trust fund would be diverted instead to finance public works and infrastructure improvements. School construction would get one-third of the money, while the other two-thirds would go to other local infrastructure needs like water, wastewater and transportation projects.

During his four years in Congress, Hill said one of his proudest accomplishments was securing the Otter Creek coal tracts from the federal government because he realized the potential it held for Montana. The Clinton administration agreed to give the state the federally owned coal tracts in exchange for halting a proposed gold mine near Yellowstone National Park.

“Not only will Otter Creek create good-paying jobs, but it can also help provide us funding for our public school system,” Hill said.

Hill said his ideas are part of a comprehensive package aimed at revitalizing education in Montana. They include: providing for more local school funding flexibility funding, rewarding effective teachers, improving student achievement measures, supporting charter schools where opportunities arise and offering tax credits for private education through educational foundations offering scholarships to low-income students.

In response, Bullock issued this comment about Hill’s plan:

“If you had to give Congressman Hill’s education plan a grade it would get an ‘F’ for arithmetic because the numbers just don’t add up, an ‘F’ for working families because it privatizes Montana’s public schools and an ‘A’ for out-of-state corporations looking for a tax break. It shouldn’t be a surprise that the congressman wants to defund, devalue and dismantle our education system, because during his time in Washington, D.C., he tried to cut $137 million from Montana’s public schools.”