(The Billings Gazette posted the following story by Jennifer McKee on its website on April 17.)
HELENA, Mont. — The House gave final approval Wednesday to a bill that would allow the state to issue up to $800 million in special bonds to help develop a railroad for a proposed Eastern Montana coal mine.
The House voted 52-48 in favor of Senate Bill 487, by Sen. Gerald Pease, D-Lodge Grass. The bill originally called for slightly expanding the amount of money the state’s Board of Investments can offer as special economic development bonds. These revenue bonds are used to finance private projects. They are not general obligation bonds that the taxpayers of Montana could be called upon to repay in case of default. If the amount of money offered is below a level set by the federal government, profits generated from the bonds are exempt from state and federal income tax.
Pease’s bill was aimed at helping two projects slated for the Crow Reservation: a proposed wind energy project and a coal-burning power plant.
On Tuesday, the House amended the bill, stretching the limit for bonds the state can offer from the $100 million in Pease’s bill to $800 million. They also voted to raise the limit for bonds the state can offer for a single project from $50 million to $600 million. Then they voted to allow such bonds to be used to build a railroad.
Rep. Ron Devlin, R-Terry, who proposed the changes, said they were designed to encourage a railroad to be built for a mine at the Otter Creek coal tracts near Ashland. The tracts contain 533 million tons of coal.
There is no coal mine at the site and the state has not prepared any coal rights leasing packages, which is the first step toward mining.
Critics of the bill, like Rep. Jim Shockley, R-Victor, said private companies, not the state, should finance a railroad.
Rep. Dave Lewis, R-Helena, said Tuesday the bonds allowed under the bill exceed the federal cap and would not be tax-exempt.
Because the bill is different from the version the Senate passed, SB487 must now go to committee of House members and senators to hash out the differences.