Governor’s Office Tells Laurel to Borrow for Water System

State was supposed to pay for part of project, but funds were "directed elsewhere"

By Molly Priddy

LAUREL — Laurel leaders should take out a loan to pay the state’s share of a new city water-intake system because the contingency funds meant for the project have been directed elsewhere, the governor’s office said.

The city wants to replace its defunct intake system on the Yellowstone River to keep water flowing to homes and an oil refinery. Flooding in spring 2011 altered the path of the river, Laurel’s main water source, away from the city’s system.

Initial plans called for a new system built 3 miles upstream with $8 million from the Federal Emergency Management Agency and a partial state match of $2.7 million.

In its budget proposal to the Legislature, the city expected the state to fund its share, but the project did not appear in spending plans passed by lawmakers in 2011 and 2013, Lee Newspapers of Montana reported.

Gov. Steve Bullock’s office put the money in an infrastructure bill that lawmakers rejected earlier this year.

A package proposed to city leaders in July would have funded the state’s share through contingency funds, grants and loans, but that package is no longer available, Bullock administration officials told the Laurel City Council on Tuesday.

“The contingency funds proposed have been directed to other projects of equal importance around the state,” said Adam Schafer, the governor’s director of community engagement.

Anna Miller of the Department of Natural Resources and Conservation told the council that the next best option is to apply to the State Revolving Loan Fund Program. A loan would allow Laurel to pay only the interest on the loan for five years.

Rep. Kelly McCarthy, D-Billings, said he would sponsor legislation in 2017 to forgive the loan and reimburse Laurel for any payments.

City Councilman Doug Poehls said he didn’t like the suggestion.

“We’re told if we take this loan, maybe it’ll be forgiven, maybe it won’t. If it’s not, we’re covering the state’s butt again,” Poehls said.

City Administrator Heidi Jensen told the council that it should take out the loan so Laurel can have the new system built by next fall.

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