Committee hears $100 million proposal to create Montana Water Development special revenue account

Representative Sean Walsh opened testimony on House Bill 256, a proposal to create a Montana Water Development special revenue account seeded with a $100,000,000 appropriation so the state can invest a permanent stream of interest earnings in water storage and related needs. "It is now time to stop discussing and start investing in this critical infrastructure," Walsh said in his opening remarks.

Why it matters: Proponents told the House Natural Resources Committee that Montana's existing state-owned storage — 22 dams, roughly 250 miles of irrigation canals and one hydroelectric facility — is aging and that steady, long-term funding is needed for maintenance, rehabilitation and pilot projects that increase storage capacity. The bill would deposit $100 million into a special revenue account; 90% of the annual interest would go to maintenance and rehabilitation of state-owned storage projects, and 10% would fund grants through DNRC's Conservation and Resource Development (CARD) program and cost-share dam inspections.

Proponents and technical detail: Ryan Evans, assistant budget director, testified on behalf of the governor's office and the executive branch and asked the committee for a “do pass.” "It's a very, very rare occurrence when I get the ability and privilege to testify on behalf of a bill that has the ability to impact every single Montana, both current and future," Evans said. Anna Packenham Stevenson, DNRC water resources administrator, told the committee that "Water storage is what allows us to capture those high spring flows and save them for when they're most needed," and outlined why storage matters for drought resiliency.

Witnesses from irrigators and local water users described specific projects and costs. The Flint Creek Water Users Association said the East Fork Reservoir and related canal system supply 37 ranches and roughly 40 miles of canal; the association is contributing about $3,500,000 to an approximately $21,000,000 East Fork Dam spillway replacement and raised unit water charges from $7.75 to $13.93 per unit in 2023 to cover rehabilitation costs. Testimony from the Red Rock Water and Sewer District and others described Lima Dam at full pool storing about 84,000 acre-feet and classified as a high-hazard dam; testimony said five-year inspection costs that in 2004 were about $1,500 are now expected to approach $30,000 for a single inspection.

Scope of eligible projects: Supporters described eligible uses broadly: above- and below-ground storage, "natural and built" storage, expansions, rehabilitation, and cost-share assistance for dam inspections under the Montana Dam Safety Act. DNRC staff noted the state operates more than 18,000 water marketing contracts with a total volume reported in testimony as 322,847 acre-feet; proponents said revenue from a now-expired power purchase agreement has reduced power-revenue streams supporting rehabilitation and that the proposed account would help close that gap.

Diverse supporters: Testimony came from irrigation districts, dam and canal associations, nonprofit watershed groups (Clark Fork Coalition), conservation districts, commodity organizations (Montana Stockgrowers, Farm Bureau), consulting engineers, and local governments; nearly all stated support and urged a do-pass recommendation.

Process and limitations: DNRC staff and proponents said the account would be managed so that only interest (not principal) is spent, with a statutory split of interest earnings outlined in sponsor testimony (90% maintenance/rehab for state projects; 10% CARD grants and inspection cost‑share). Representatives asked whether $100 million is "enough;" the sponsor and supporters characterized the amount as a start and an opportunity to seed long-term, perpetual interest funding rather than a one-time fix for all needs.

Committee action: The hearing closed with the sponsor requesting a do pass. No formal floor or committee vote on HB 256 is recorded in this hearing transcript; the record shows only the hearing testimony and the committee's question period.