Bill would redirect coal-trust interest to fund trooper pay and DOT operating account

HELENA — House Bill 615 proposes redirecting interest earnings from Montana’s coal severance tax permanent fund to two purposes: an annual $2 million appropriation to the Department of Justice to help retain troopers and the remainder to the Highway State Special Revenue Account (HSRA) at the Department of Transportation, sponsor Rep. Jerry Schillinger said at a House Taxation Committee hearing.

Schillinger (Rep. Jerry Schillinger) said the measure is “a simple $20,000,000 bill,” with roughly $2,000,000 directed to DOJ and about $18,000,000 going to HSRA. He described the funding as interest earnings from the coal trust rather than new severance collections.

The bill also extends the statutory sunsets on a set of existing interest distributions that otherwise are scheduled to end; those distributions would be continued through June 30, 2029, under the bill, with portions of the bill’s allocations remaining in law after July 1, 2029, according to legislative fiscal staff. Alice Hecht of the Legislative Fiscal Division told the committee that the bill’s first effective provisions begin July 1, 2025, and that the extension runs through July 1, 2029, after which some parts of the statute would remain in effect.

Why it matters: HSRA is the state’s operating account for transportation projects and maintenance; it supplies the state match for federal highway dollars and provides cash flow to pay contractors while federal reimbursements are processed. Rep. Schillinger and Department of Transportation staff emphasized that federal formula money requires roughly an 87¢ federal to 13¢ state match on major construction, and that matching needs strain HSRA when federal funding grows quickly.

Key details and program amounts: The sponsor and witnesses described the bill as reallocating interest rather than diverting general fund revenues. Testimony and the bill text named existing interest-based appropriations that the measure would extend through 2029, including (amounts as described in testimony): $65,000 for a Small Business Development Center (Department of Agriculture); $900,000 for the Growth Through Agriculture program (Title 90, Ch. 9); $600,000 for the Montana Food and Agricultural Development Program (Title 80, Ch. 11); and several Department of Commerce items: $325,000 for a Small Business Development Center, $50,000 for a small business research program, $625,000 for certified regional development corporations, $500,000 for the Montana Manufacturing Extension Center at Montana State University, and $300,000 for export trade enhancement. Those existing allocations are scheduled to sunset in 2027 absent legislative action and would be extended to 2029 by HB 615, the committee heard.

Fiscal and projection questions: Legislative fiscal staff and DOT analysts said coal-trust interest earnings vary but are projected to grow slowly; the $20 million figure is an estimate rather than a fixed annual appropriation. Alice Hecht and Sam Schaeffer (Legislative Fiscal Division) said the interest stream can change year to year and that the fiscal documents provided with the hearing show different projected balances depending on assumptions about federal funding growth.

DOT deputy director Larry Flynn told the committee that covering the HSRA shortfall with a traditional motor fuel tax increase would be roughly equivalent to a 3 to 3.5¢ per gallon increase. Flynn said the HSRA provides the state match and cash flow for construction and maintenance projects and that an infusion of interest earnings would reduce pressure for a near-term fuel-tax increase.

Questions and concerns from committee members focused on three points: whether the money is strictly interest earnings (George Harris, Montana Coal Council, confirmed the bill uses interest from the coal trust), the permanence of the redirection (several members asked whether making these allocations statutory would tie future legislatures’ hands), and whether the full $20 million is necessary. Representative Kohlenhauer said she planned to offer an amendment to preserve existing program allocations while directing a smaller remainder to transportation; the sponsor and staff said committee amendment and executive-action options remain available.

No public proponents or opponents testified in person or online during the hearing; the committee heard from informational witnesses including Larry Flynn (Deputy Director, Department of Transportation), Mandy Rambo (Deputy Director and Acting Director, Department of Commerce), Alice Hecht and Sam Schaeffer (Legislative Fiscal Division), Mackenzie Esplin (Division Administrator, Department of Commerce) and George Harris (Executive Director, Montana Coal Council).

Outcome and next steps: The committee did not take a vote during the hearing. Committee leadership said executive action on HB 615 is scheduled to proceed in upcoming committee work (the chair announced executive actions to be scheduled), and members indicated amendments could be offered prior to executive action.

The hearing record shows the bill would reallocate coal-trust interest rather than change the coal severance tax rate; witnesses and members repeatedly noted the proposal is an allocation of interest earnings and that the $20 million figure is an estimate that can vary with investment earnings and legislative changes.