HELENA — As the Montana Legislature puts together the final state budget plan, lawmakers are now considering one bill that would eventually put more than $1 billion into a new state trust – intended to tackle everything from property tax relief to infrastructure to child care.
The Senate Finance and Claims Committee held its first hearing Tuesday on House Bill 924, sponsored by Rep. Llew Jones, R-Conrad.
(Watch the video for a closer look at how the trust would work.)
Jones says it makes sense for the state to put away money now to prepare for future needs.
“It starts really making a difference today in what it's distributing – but also for the future and what it promises for our children and our grandchildren,” he said.
HB 924 would set up the “Growth and Opportunity Trust” – which Jones calls the “GO Trust” – where money would be held and invested to earn interest over time. The state would direct around $600 million to the trust in the first year, then another $400 million in the second year.
While the money would go into a single trust, the bill would separate it into many different portions. More than half of the main body of the trust would be used for two “reinvested” programs: one to fund loans for construction of multifamily homes, veterans’ home loans and housing infrastructure; and one that would serve as a backup for state employee pension systems, in case of a significant crash.
Half of the annual interest on the trust would go back into those reinvestment programs. The rest of the interest would go toward new state special revenue accounts, including one for building and maintaining state-owned water storage projects, one to help local governments pay for bridge repairs, one to provide grants for child care providers and workers, and one that would pay for a property tax credit for Montanans’ primary residences. A fiscal analysis predicts each of the accounts would receive around $5 million a year after two years.
Jones said the trust in HB 924 would have similarities with the state’s coal trust, which similarly collects taxes on coal production and allows the principal to grow while using the interest to fund programs. He said the coal trust currently holds about $1.2 billion, and the new trust would start out smaller but would quickly grow much larger.
Many of the individual ideas in the trust came out of other bills that have already been heard at the Legislature – like the property tax proposal, which borrows its structure from Senate Bill 90.
“The underlying pieces of this trust were vetted thoroughly in individual bills,” said Jones. “The concept here was, how do you put them all together into an instrument that has better transparency, better visibility, a greater return, and could one day become something very substantial?”
Jones says the structure of HB 924 – offering a little something in many different areas – is an advantage.
“It causes folks to understand the value of the trust, because while some folks might be here just for bridges, some folks might be here just for childcare, some folks might be here just for water, when they're part of something bigger, it helps them understand there needs to be an inflow into the trust overall to invest in future Montanans,” he said.
Senate President Sen. Matt Regier, R-Kalispell, told reporters Tuesday he was opposed to the bill for now. He said he understands the concept of a trust, but he has some concerns about tying money to these particular uses.
“I do have reservations, and I think a lot of especially the Finance and Claims guys – at least conservative guys – have reservations,” he said. “You're doing a lot of the appropriating that should be done in future legislation.”
Regier, who has been strongly supportive of SB 90, said he liked that HB 924 used the same structure for property tax assistance, but he didn’t think the amount of that relief would be enough.
Senate Minority Leader Sen. Pat Flowers, D-Belgrade, said Tuesday that he also has questions about things like the details of HB 924’s property tax provisions. However, he said he likes the idea of making a formal commitment to address some of these issues.
“Salting some money away where we can earn interest on it, to meet some of what now are agreed-upon high priorities for Montana, I think makes a lot of sense,” he said. “It's kind of the way we manage our own affairs – you save for your kids’ college or you save for the home improvement project or whatever.”
HB 924 passed the House 53-44. If the Senate makes any changes to the bill, it will have to return to the House by April 23.
