Montana has some struggles on the horizon, which won’t please the Republicans who wish to tighten the purse strings in state government through tax and budget cuts. State revenues have already taken a hit. And the hit isn’t due to COVID.
Coal tax revenues are on a decline, and Montana relies heavily on those funds. Conservationists blame the energy market’s move away from fossil fuels. Industry leaders blame strict regulations. But the market forces independent of regulation are real: competitively priced natural gas and cheaper batteries that can store electricity from renewable energy have harmed coal producers. And with reduced production, Montana’s budget suffers. Montana taxes coal gross proceeds from coal sales and receives an average of $210 million annually. Montana also taxes coal production, which used to provide around $60 million annually to state revenues reliably. Montana relies upon coal tax revenues to pay for nearly a dozen government services, including basic library services, conservation districts, cultural, and agriculture programs. And coal taxes have been falling. In 2019, coal severance taxes collected were $49 million, down $11 million from the year before, and the lowest amount collected for the past five years. If coal severance was down $11 million, the tax collections on gross proceeds must be way down too. And there are other coal economy tax losses on the horizon. In March, the Lewis and Clark Power Plant near Sidney will shut down.
Coal has been a significant contributor to state funding but is no longer a reliable source of revenue, and we have no replacement for the revenue. So, independent of the depleted reserve fund, the lost income taxes, and lost business equipment taxes the state suffers due to the COVID economic crisis, the lost coal tax revenues are a significant and probably permanent hit to the state coffers. Simply put, when the legislature convenes in January, they will be met with a state budget short on revenues but static in expenses.
In addition to the revenue loss from coal and COVID, the new governor and the far right legislative majority have planned intentional cuts to state revenues by way of tax cuts. The rumored cuts to state services will likely surface if the legislative majority has its way. Montana has left two gaping holes in its budget for years that need to be addressed: addiction and suicide. We have more kids in foster care per capita than any other state primarily due to addiction. We hold the title for highest suicide numbers per capita in the United States. Further legislative stalling on these issues will come at devastating effect to Montana families. If ever there was a time to pay attention to what the Montana Legislature is doing, it’s now.
Tammi Fisher is an attorney and former mayor of Kalispell.
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