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HomeMy WebLinkAboutGovernor's Coal Impact Review Governor's Local Coal Impact Review Council August, 2000 D C ' � v AUG 9 2000 D MEMORANDUM CITY 0 : LAUREL TO: Montanans Interested in `Coal Country' FR: Senator Mack Cole, Chairman Governor's Local Coal Impact Review Council RE: Coal Impact—A Public Policy Report We, the members of the Governor's Local Coal Impact Review Council, have been missioned to study the past, review the current and project the future of`Coal Country' as it relates to the many impacts associated with both coal development and coal decline. To accomplish those duties, it must first be recognized that the council is part of a continuum, not an end unto itself. Therefore, we must understand both where we have been and choose among the alternatives as to where we can and should go. Second, it is important to recognize that while the volunteer council is comprised of members with excellent skills and a wide variety of experiences in many disciplines, the council does not have the time or resources to undertake significant studies, do research, or retain the services of specialists who may be able to contribute more current information or to statistically authenticate some of our conclusions. Instead,the basis of our findings must rely on published data,the opinions of experienced professionals on the council, others with coal impact mitigation experience, and information provided by the Department of Commerce Staff. From both a practical and a strategic viewpoint, however, sufficient information and resources appear to be available to offer informed and credible opinions. We now need the critical review of the broader public. This document and its use in forming public policy may well have some enduring impact on the lives and the economies of many throughout all Montana. Please look this over. Please let us know what you believe to be good, bad, missing or whatever, but let us know how you feel about the future of`Coal Country'. Thank you. 1424 91"Avenue " Helena MT 59620 " (406) 444-4480 4 Y Coal Imp t 1ewCound1 Ninjth A r n Aalena,MT 59,dfl1 , Contact: Newell Anderson i .; , 406/444-4480 Publk Mftflug Govon 94 L94Q,Con1 Impact Revitw Couneu k Polls Imacho4w 4,meeting of tie Governor's'L;ocal Coal lmpaet Review 1 aaiblac,.to cow" ►att FPsnort the Council�blq abers have developed on t rpulio ,1004V img ts. The:Council welcomes this opportunity far . ►� ion ;encoar all meted persons to attend or:tub 'submit written comments. .HIT MO ISM. especially encouraged to be an active part of this �.�ew, P6340. 13 4W posblut "CeW Cctrrna 's"Future? VIE '+s=p ; icipte axa shri} g it! 4 R e 1asr u jW9. - 227 N 27tb Dilllug 144antana , , F �y��iss�tap;�h�anxber;� - Ru1.At13-e� T'tl Sp+W� 10.00,AM-to 2:00 PM(Break for Lunch) °OLOCQ Co011 a OviewC*uncll's i°Draft: ort" A 1pwsOW:ldbereOgd bx,the A*re of Coal Country by Oct is Lo: Nwmll B. Anderson hdt➢apt of Commerce 1424 ft-Avepue Helene.MT S%20 ' Fbone:(496).444-4480 or FAX 444.4482 -30- i 4 i } Y T bl�:f 4 } GOVERNOR'S LOCAL COAL IMPACT REVIEW COUNCIL July 2000 SECOND DRAFT FOR PUBLIC COMMENT +& DISCUSSION PURPOSES ONLY In 1999, .the Montana Legislature passed House Bill #644, which created the Governor's Local Coal Impact Review Council. Section 1. Article (2) describes the purpose of the council as two-fold: 1. "to review and report on Montana's existing public policy regarding the impact resulting from coal development", and 2. "to develop findings, conclusions, and recommendations as to what the policies should be, both now and into the 21st century." The following report represents the review, findings, conclusions and recommendations of this Council. This report and its addendum's will be submitted to the Governor and the 57th Legislature for their deliberate considerations. 1. PUBLIC POLICY: Background: Existing local coal impact policy is not clearly nor easily defined. It is not located in one all encompassing statement, but is instead shaped by our laws, the methods used to implement those laws, and the appropriations allocated each area of authorized activity. However, public policy regarding coal impact in Montana's also evolutionary, encompassing nearly thirty years of experience, precedent, and change, some of which has been dictated by court decisions, legal opinions, current customs and related public policy. HB#644, which created the Governor's Local Coal Impact Review Council, underscores the fact that a coal impact public policy exists and that it continues to change. Montana is the only state that has consistently maintained a specific legal mechanism to provide for resources to address coal impact at the local level. The Montana Coal Board, created in 1975 along with the adoption of the Coal Severance Tax, remains intact today. The fact that the Coal Board exists and that its policies and practices have evolved for more than thirty years, signifies that both the Executive and Legislative branches of the State of Montana recognize that local impacts have existed and continue to exist in the coal producing regions. It is a clear demonstration of a long-term commitment to a principle and implied obligation. Governor's Local Coal Impact Review Council Report Page two - 2nd Draft While much debate surrounds the degree and type of local impacts and best methods for addressing those issues, and while public policy may not be singularly delineated, Montana Legislative policy defines the Coal Board as the state authority for addressing local coal impact decisions. Additionally, it is incumbent upon local governmental units to make their own informed impact decisions and to present new coal impact information to the Office of the Governor, the Montana Legislature, Coal Board, and the Department of Commerce, for evaluation and future public policy development. A method to defining current coal impact policy is to examine expenditures authorized by the most recent Montana Legislature. The amount of money committed to various areas reveals their relative importance in the overall scheme of Montana's needs. Exhibit A Hallam Caal Severarme Tax Major UMuaermft IM9 Pr narrentTrust $18,383,744 SIAeGmeral Fund $ 9,283,791 Slate Long Range Building $ 4,412099 8 Chher Stab-.Programs $ 2,607,727 Coel Board/Local Coal Board/Local Impact $ 2,080,127 8aher Sale Programs Impadt 5.7% Total $3A767AN 7.0% Spate Long Range Build 12O% Slate Ge3neral Fund 25.3% R-rrrranentTrust 50.0% Governor's Local Coal Impact Review Council Report Page three —2"d Draft It is instructive to note that beyond the individual coal tax policy effecting `Coal Country" the same state legislature relies significantly on current coal tax revenues and long term coal tax trust fund proceeds to balance the statewide budget that operates all of state government. Exhibit B shows the significance of coal to the states annual general fund budget. Exhibit B Nbin am State General Fund Receipts By Nbior Component 1%9 IndividuallncorneTax $483,031,571 Property Taxes $201,759,085 Corporation Tax $ 80,142,416 Coal Tax&Trust Earnings $ 49,811,791 Interest Income $ 41,432,733 25 Other Tax Other Revenue $ 38,870,237 Conponerb 14.29% Insurance Tax $ 38,137,472 26 Other Tax Components $157,694,166 Insurance Tax 3.5°/ Total $1,090,879,470 Other Pevertue a5�/ I rderest& Income a8°/o - i Coal Tax& Trust Earnings 4.79/6 CaporationTo( 7.49/6 lr&Adual PropertyTaDes 18.51/6 InoorreTaos 44.3% Governor's Local Coal Impact Review Council Report Page four - 2nd Draft Impact Policy: The method of allocating funds to the Montana Coal Board is currently based upon the submission of a list of impact pre-applications supplied by local governments prior to the Legislative session. Unless a specific project is earmarked by the Legislature to receive funding, the Montana Coal Board has the authority to distribute available funds as grants to impacted communities. With the local impact funding declining from 17.5% in FY 76 to a low of 1.52% in FY 88 & 89, and for the past ten years leveled at about 6% of the Severance Tax, it can be concluded that while a historical decline has occurred, funding percentages have remained reasonably stable. Unfortunately, while the impacts of decline has started, the coal severance tax revenues have also declined, leaving significantly less funding available for all State uses, including local coal impact. And of course, in terms of"real dollars", inflation and cost increases have further eroded the value of funds available. To receive appropriated impact funds from the Coal Board, eligible applicants must first define coal impacts at the local level by submitting a formal pre-applications. Statutory definitions regarding "designated" coal impacted areas are clear. A minimum of 50% of the available funding must be granted to eligible applicants residing inside that geographic designated area. This provides limited discretion to the Coal Board to consider coal impact related projects statewide. While the Coal Board has never established a formal numerical ranking criteria, certain statutorily priorities are defined. They include: A) Need; B) Degree of severity of impact from an increased or decrease of coal development or in the consumption of coal by a coal - using energy complex; C) availability of funds; and D) degree of local effort in meeting these needs. Montana statute prescribe how "coal impacted areas" are defined and it defines the priorities as above mentioned. The law also recognizes that local conditions in each community vary and priorities change as issues are resolved. A review of previous projects funded by the Coal Board clearly shows that no single definition of coal impact by type-or project can be mandated. In short, the definition of coal impact is flexible as is Montana's official policy toward it. II. FINDINGS: • Existing public policy regarding local impact from coal development is based upon public perceptions and is constantly changing. • There is no universal definition regarding what constitutes impact other than that defined by population changes. Precedent is defined in terms of which services and concerns have constituted local impact. Beyond those defined by statute, there are no universal internal Coal Board priorities that determine how and which projects should be addressed. • The funding mechanism available to address local impacts is unpredictable from one Legislative session to the next. Thus long-range planning at any level is limited. Governor's Local Coal Impact Review Council Report • Page five — 2"d Draft • It is the responsibility of eligible applicants to identify local coal impacts and to communicate those needs to the Coal Board and the Montana Legislature to help define future impact funding. III. CONCLUSIONS: Before public policy for the future can be recommended some essential facts about coal development must be acknowledged and understood by key decision-makers. In the most abbreviated form, and not necessarily all - inclusive, they are: 1. Montana has the largest defined deposit of coal in the United States. 2. Existing coal mines have a finite life. Existing coal mines in Montana developed in the mid 1970's can predictably produce coal for some 30 plus years. Increases to that life cycle would require significant change in mine depth, transportation limits and or energy market conditions. 3. Considering the existing competitive market, energy policy, environmental policy, tax policy and transportation capacity, it is unlikely that there will be a coal "Boom" in Montana in the foreseeable future. 4. The impacts to the general wellbeing of the people of the State of Montana from coal production are its skilled employment base and its tax contribution to the state's significant Coal Severance Tax Trust Fund. 5. The impacts to specific wellbeing of the people in coal area counties, particularly Rosebud and Big Horn, are immediate, dramatic, and all-inclusive. IV. POLICIES RECOMMENDED: 1. Develop and incorporate into all future State of Montana development policies such as VISION 2005, a realistic strategic coal management plan designed to pro-actively address concerns of local communities, State and Federal agencies, Indian Tribes, and the coal,industry. 2. Provide the coal industry the same level of acceptance and assistance as is afforded other industries in Montana. Insure the full participation of all interested parties, including the coal industry, in all public policy discussions affecting the future of coal in Montana. 3. Ensure an ongoing evaluation process whereby physical, economic, and social conditions of the coal region are reviewed, and act appropriately to address those situations. 4. Continue the formal impact partnership relationship between the state and local communities through the Montana Coal Board. Governor's Local Coal Impact Review Council Report • Page six - 2"0 Draft V. RECOMMENDED ACTIVITIES: (Policy Implementation) 1. Provide realistic long term funding commitments for specific impact related use by those in coal country. 2. Develop other meaningful incentives to economically stabilize the economies of coal country. 3. Continue to Legislatively authorize and utilize the existing legal and administrative mechanisms currently provided for by the State of Montana. ( ie: Coal Board ) 4. Encourage activities and projects that provide long-term solutions to impact problems; in order to achieve the most efficient use of available funds and other resources. 5. Enhance general guidelines for priorities in funding local impact projects. 6. Fund specific plans to: A. develop a coal mine strategy for each community. B. update the Coal Board's IMPLAN computer model annually. C. promote planning and utilization of other non-coal specific resources. 7. Modify existing legislation to enable the Coal Board to focus its attention upon the, long term aspects of coal impact mitigation and adequately fund the Board so it can accomplish its mission (ie: endowments and coal utility enhancements ) 8. Utilize fully, other resources of the State of Montana to help promote increased coal production. 9. Create targeted economic revitalization efforts aimed at reversing the downward trends in the economy of SE Montana, with special emphasis on the coal country. VI. FUNDING SOURCES: This issue continues to be debated and is under construction— we look for your suggestions. VII. CONCLUSION: — It is possible to mitigate coal impacts, but it will require vision, insight and statesmanship on the part of the local and state leadership. While the methods of the past were both appropriate and successful, it must be.recognized that local governments and others charged with the responsibility of maintaining community well-being will need new tools to deal with new issues. Moreover, local leaders and the State must work in harmony to develop new insights, and modify existing philosophies and practices. To a large degree, if public coal policy is to evolve and succeed in Montana, responsibility will rest with locally elected officials and other community leaders. Historically, it has been incumbent upon locals to communicate their concerns, needs and situations in a meaningful manner to the Executive Branch and the State Legislature. Contacts for comments about this July 2000, 2nd draft Report: The Governor's Council members Coal Board Representative At Large Representative Alan Evans Rusty Rokita 4300 US Hwy 87 South Box 272 Roundup, MT .59072 Hardin, MT 59034 (406) 245-6161 (406) 665-3355 Coal Company Representatives _ Robert W. Cope Tony Ritter Manager Manager Western Energy Co. Decker Coal Co. Box 99 Box 12 Colstrip, MT 59323 Decker, MT 59025 (406) 748-5152 (406) 757-2561 City Representatives John Williams Larry Vandersloot Mayor Director City of Colstrip Hardin Public Works Box 1902 406 N. Cheyenne Colstrip, MT 59323 Hardin, MT 59034 (406) 748-2300 (406) 665-2113 County Representatives John Pretty on Top Joan Stab] Commissioner Commissioner Big Horn County Commission Rosebud County Commission Box 908 -Box 47 Hardin, MT 59034 Forsyth, MT 59327 (406) 665-3520 (406) 356-2251 Legislative Representatives Sen. Mack Cole Rep. Lila Taylor Chairperson Vice Chairperson Box 288 Box 595 Kirby Route Hysham, MT 59038 Busby, MT 59016 (406) 342-5384 ____ (406) 757-2236 Council Staff: Newell Anderson Mt. Department of Commerce 1424 9h Avenue Helena, MT 59620 (406) 444-4480 2 Go v I ocal coal impactrev iewcounc i I.doc