A new law has changed how the state of Montana pays for its share of wildfire suppression costs by setting aside the money before fires occur, instead having to come up with the cash months later after the fire season ends.
House Bill 354, by Rep. Pat Connell, R-Hamilton, passed with bipartisan support, and Gov. Steve Bullock, a Democrat, signed it into law. It took effect May 1.
The new law represents a major change in how the state will pay for its share of fire suppression costs.
“I consider it my signature piece of legislation so far, as it effectively will save Montana taxpayers an average of $23 million annually, and finally, by establishing a statutory process to fund wildland fire suppression,” said Connell, a forestry consultant in his second term in the House.
The $23 million is the average of how much the state has appropriated for fire suppression annually in recent years, he said.
Bullock’s budget director, Dan Villa, and the state forester Bob Harrington, also are praising the law.
It directs money from certain sources into a special revenue account to cover wildfire suppression costs. The fund is capped at $100 million.
“God help us all if we exceed a fire bill of $100 million,” Connell said.
General fund money no longer will have to be appropriated, thus improving its status fiscally at the Legislature, he said.
Instead, money from these sources will automatically roll into the special revenue account year after year, providing a steady stream of cash for fire suppression, unless a future legislative session changes it. One source of funding will last for three years.
Recent tallies by the Governor’s Office of Budget and Program and the Legislative Fiscal Division shows the wildfire suppression fund is now at $51.7 million.
Here’s the budget office’s breakdown this year:
- $25.5 million in excess corporate license or income tax revenues. The law provides that any revenue from this tax that is more than what the Legislature estimated goes into the fire suppression fund for the next three years.
- $13.3 million from budget reversions. These are appropriations to state agencies that they didn’t completely spend by the end of the budget year on June 30. The law provides that any reversions in excess of 0.5 percent of total general fund must be transferred to this fund.
- $11.9 million left from the appropriations in HB3, the bill funding the supplemental spending for fire suppression costs and other unanticipated spending.
- $943,867 from money not spent from the governor’s fund to deal with costs associated with emergencies such as fires and floods.
Connell said it makes sense to provide for a dedicated firefighting fund instead of scrambling to pass a supplemental appropriation through the Legislature to cover fire costs months after the money was spent.
“Such supplemental expenditures come from subsequent tax revenue, so that Montanans and their representatives fundamentally start off their budgetary process ‘in the hole,’ ” Connell said.
State forester Harrington of the Montana Department of Natural Resources and Conservation said he is “really satisfied” with the new law.
“It’s more money than we’ve ever had,” he said of the $51.7 million. “It won’t change our operations at all. We are still very focused on the most cost-effective way to suppress the fires that we have jurisdiction for.”
As of last Monday, the state’s share of firefighting costs so far this year was just $2.2 million, according to John Grassy, DNRC spokesman.
That’s a fraction of the state’s $56 million bill last year to cover its share of fire suppression costs, Harrington said.
The state forester, too, said he supports having the new fund rather than having to get the Legislature to pass a supplemental appropriation.
“For us operationally, we always had the confidence that somehow and some way, the Legislature is going to pay, but now the money’s in the bank,” Harrington said. “The money is there. That’s a comfort not only to me, but also to the director.”
Gov. Bullock, as a top budget priority, wanted to address unfunded liabilities before undertaking any new programs, said Villa, his budget director. Fire suppression costs fell into that category.
“Now instead of looking back, we have a pool that, in an ongoing fashion, can fund this,” said Villa, a former legislator. “Now we’re paying forward.”
Bullock traveled to New York City after the Legislature adjourned to meet with representatives of the three rating agencies – Fitch Ratings, Moody’s Investors Service and Standard & Poor’s. Their ratings help determine interest rates when the state issues debt such as bonding.
The higher a state’s bond ratings, the lower its interest rates on a project. That in turn makes it less expensive for a state to issue debt.
“The rating agencies are very excited about the bill,” said Villa, who accompanied Bullock.
Villa said Montana’s method of paying for fire suppression costs prior to 2007 was “just pay backward.” The Legislature would approve the payment of the state’s fire suppression bills in the winter.
“Some vendors would go months without getting paid,” Villa said.
During a 2007 special legislative session when Gov. Brian Schweitzer was governor, the Legislature made a $40 million appropriation to a fund to cover wildfire suppression costs.
“It took about five years to exhaust that,” Harrington said.
The law provides that when the fund hits $100 million, any excess money goes to the state general fund.
In addition, it provides that up to $5 million ever two years may be used for fuel reduction, mitigation and forest restoration, such as the purchase of equipment for volunteer fire departments. Connell credited House Appropriations Chairman Duane Ankney, R-Colstrip for this idea.
He praised the work of Villa, Ankney, Reps. Galen Hollenbaugh, D-Helena, and Rep. Rob Cook, R-Conrad, on the bill.
“This was kind of a group effort,” Connell said.