Legislature

Lawmakers Consider Payment Plan for Coal Mining Back Taxes

The legislation would allow counties to work with companies to settle the terms of payment plans for back taxes owed

By Associated Press

BILLINGS – A lawmaker in Montana has proposed legislation intended to let county officials negotiate a collection agreement with coal companies that owe more than $8 million in delinquent taxes to the county.

Republican state Sen. Jason Small, who is sponsoring the bill, didn’t name Big Horn County or Navajo Transitional Energy Co. in the proposal but said commissioners and company officials were clear it was drafted with the company’s unpaid coal taxes in mind, The Billings Gazette reported Tuesday.

“It’s allowing the company, which took over the obligation of the taxes on that transaction, to set up a payment plan with the county,” Small told the state House Taxation Committee during the bill’s hearing.

The committee didn’t take any immediate action on the bill. It passed the Senate last month with bipartisan support.

Navajo Transitional Energy Co. assumed tax liability of the Spring Creek Mine when it bought its parent company Cloud Peak Energy in a bankruptcy sale in 2019. Big Horn County Treasurer Denise Rios said on Tuesday that the company now owes the county $8.8 million in gross proceeds taxes, which are collected on the amount of coal mined.

The Decker Mine, owned by Decker Coal, owes the county another $2.9 million in delinquent coal taxes, and about $400,000 in county property taxes.

County taxpayers historically enjoyed low tax rates with coal mining accounting for a large share of the budget. However, the decline in the demand for coal hit the county hard in recent years.

The legislation would allow counties to work with companies to settle the terms of payment plans for back taxes owed on gross coal proceeds, interest and penalties. Small said the bill requires the county to get the state’s permission, consult with the governor’s budget office and hold a public hearing.

Some Democratic lawmakers and at least one environmental group have warned against the bill, arguing it could allow companies to ultimately pay less than they owe.

Derf Johnson, a lobbyist for the Montana Environmental Information Center, said that with the coal industry in its current state, an installment plan could backfire if companies declared bankruptcy.

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