Bill Summary – FastDemocracy

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68th Legislature 2023                                                                                         HB 881.1
                                               HOUSE BILL NO. 881
                                          INTRODUCED BY E. BUTTREY
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  A BILL FOR AN ACT ENTITLED: “AN ACT GENERALLY REVISING LAWS RELATED TO THE BIG SKY
  ECONOMIC DEVELOPMENT PROGRAM; REMOVING LOCAL AND TRIBAL GOVERNMENTS AS ELIGIBLE
  APPLICANTS; ALLOWING BUSINESSES TO APPLY DIRECTLY TO THE PROGRAM; REMOVING
  REQUIREMENTS RELATING TO HIGH-POVERTY COUNTIES; REMOVING REQUIREMENTS
  ASSOCIATED WITH JOB CREATION; REMOVING ALLOCATIONS FOR DISTRIBUTIONS TO LOCAL OR
  TRIBAL GOVERNMENTS AND CERTIFIED REGIONAL DEVELOPMENT CORPORATIONS; ALLOWING
  AWARDS FOR WORKFORCE ACTIVITIES; REVISING A STATUTORY APPROPRIATION ALLOCATION;
  TRANSFERRING FUNDS FROM THE MICROBUSINESS FINANCE PROGRAM ADMINISTRATIVE
  ACCOUNT TO THE ECONOMIC DEVELOPMENT STATE SPECIAL REVENUE ACCOUNT; TRANSFERRING
  FUNDS FROM THE PRIMARY SECTOR BUSINESS TRAINING ACCOUNT TO THE ECONOMIC
  DEVELOPMENT STATE SPECIAL REVENUE ACCOUNT; TRANSFERRING DEFEDERALIZED ECONOMIC
  DEVELOPMENT FUNDS FROM THE DEPARTMENT OF COMMERCE TO THE ECONOMIC
  DEVELOPMENT STATE SPECIAL REVENUE ACCOUNT; EXTENDING THE SUNSET DATE ON THE COAL
  SEVERANCE TAX TRUST FUND FOR THE BIG SKY ECONOMIC DEVELOPMENT PROGRAM; REVISING
  DEFINITIONS; PROVIDING RULEMAKING AUTHORITY; AMENDING SECTIONS 17-5-703, 17-6-407, 17-6-
  409, 39-11-205, 90-1-201, 90-1-202, 90-1-203, 90-1-204, AND 90-1-205, MCA; AND PROVIDING AN
  EFFECTIVE DATE.”
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  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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          Section 1. Section 17-5-703, MCA, is amended to read:
          "17-5-703.   (Temporary) Coal severance tax trust funds. (1) The trust established under Article IX,
  section 5, of the Montana constitution is composed of the following funds:
          (a)      a coal severance tax bond fund into which the constitutionally dedicated receipts from the coal
  severance tax must be deposited;
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68th Legislature 2023                                                                                               HB 881.1
          (b)      a Montana coal endowment fund;
          (c)      a Montana coal endowment regional water system fund;
          (d)      a coal severance tax permanent fund;
          (e)      a coal severance tax income fund;
          (f)      a big sky economic development fund; and
          (g)      a school facilities fund.
          (2)      (a) The state treasurer shall determine, on July 1 of each year, the amount necessary to meet
  all principal and interest payments on bonds payable from the coal severance tax bond fund during the next 12
  months and retain that amount in the coal severance tax bond fund.
          (b)      The amount in the coal severance tax bond fund in excess of the amount required in
  subsection (2)(a) must be transferred from that fund as provided in subsections (4) and (5).
          (3)      (a) The state treasurer shall monthly transfer from the Montana coal endowment fund to the
  Montana coal endowment special revenue account the amount of earnings, excluding unrealized gains and
  losses, required to meet the obligations of the state that are payable from the account in accordance with 90-6-
  710. Earnings not transferred to the Montana coal endowment special revenue account must be retained in the
  Montana coal endowment fund.
          (b)      The state treasurer shall monthly transfer from the Montana coal endowment regional water
  system fund to the Montana coal endowment regional water system special revenue account the amount of
  earnings, excluding unrealized gains and losses, required to meet the obligations of the state that are payable
  from the account for regional water systems authorized under 90-6-715. Earnings not transferred to the
  Montana coal endowment regional water system special revenue account must be retained in the Montana coal
  endowment regional water system fund.
          (4)      (a) Starting July 1, 2017, the state treasurer shall quarterly transfer to the school facilities fund
  provided for in 20-9-380(1) 75% of the amount in the coal severance tax bond fund in excess of the amount that
  is specified in subsection (2) to be retained in the fund. The budget director shall certify to the state treasurer
  when the balance of the school facilities fund is $200 million. Beginning with the quarter following this
  certification, the state treasurer shall instead transfer to the coal severance tax permanent fund 75% of the
  amount in the coal severance tax bond fund that exceeds the amount that is specified in subsection (2) to be
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68th Legislature 2023                                                                                               HB 881.1
  retained in the fund.
           (b)     The state treasurer shall monthly transfer from the school facilities fund to the account
  established in 20-9-525 the amount of earnings, excluding unrealized gains and losses, required to meet the
  obligations of the state that are payable from the account. Earnings not transferred to the account established
  in 20-9-525 must be retained in the school facilities fund.
           (5)     (a) From July 1, 2005, through June 30, 2025 2035, the state treasurer shall quarterly transfer
  to the big sky economic development fund 25% of the amount in the coal severance tax bond fund in excess of
  the amount that is specified in subsection (2) to be retained in the fund.
           (b)     The state treasurer shall monthly transfer from the big sky economic development fund to the
  economic development special revenue account, provided for in 90-1-205, the amount of earnings, excluding
  unrealized gains and losses, required to meet the obligations of the state that are payable from the account in
  accordance with 90-1-204. Earnings not transferred to the economic development special revenue account
  must be retained in the big sky economic development fund.
           (6)     Any amount in the coal severance tax bond fund in excess of the amount that is specified in
  subsection (2)(a) to be retained in the fund and that is not otherwise allocated under this section must be
  deposited in the coal severance tax permanent fund. (Terminates June 30, 2031--secs. 1 through 3, Ch. 305, L.
  2015.)
           17-5-703. (Effective July 1, 2031) Coal severance tax trust funds. (1) The trust established under
  Article IX, section 5, of the Montana constitution is composed of the following funds:
           (a)     a coal severance tax bond fund into which the constitutionally dedicated receipts from the coal
  severance tax must be deposited;
           (b)     a Montana coal endowment fund;
           (c)     a coal severance tax permanent fund;
           (d)     a coal severance tax income fund;
           (e)     a big sky economic development fund; and
           (f)     a school facilities fund.
           (2)     (a) The state treasurer shall determine, on July 1 of each year, the amount necessary to meet
  all principal and interest payments on bonds payable from the coal severance tax bond fund during the next 12
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68th Legislature 2023                                                                                               HB 881.1
  months and retain that amount in the coal severance tax bond fund.
          (b)      The amount in the coal severance tax bond fund in excess of the amount required in
  subsection (2)(a) must be transferred from that fund as provided in subsections (4) and (5).
          (3)      The state treasurer shall monthly transfer from the Montana coal endowment fund to the
  Montana coal endowment special revenue account the amount of earnings, excluding unrealized gains and
  losses, required to meet the obligations of the state that are payable from the account in accordance with 90-6-
  710. Earnings not transferred to the Montana coal endowment special revenue account must be retained in the
  Montana coal endowment fund.
          (4)      (a) Starting July 1, 2017, the state treasurer shall quarterly transfer to the school facilities fund
  provided for in 20-9-380(1) 75% of the amount in the coal severance tax bond fund in excess of the amount that
  is specified in subsection (2) to be retained in the fund. The budget director shall certify to the state treasurer
  when the balance of the school facilities fund is $200 million. Beginning with the quarter following this
  certification, the state treasurer shall instead transfer to the coal severance tax permanent fund 75% of the
  amount in the coal severance tax bond fund that exceeds the amount that is specified in subsection (2) to be
  retained in the fund.
          (b)      The state treasurer shall monthly transfer from the school facilities fund to the account
  established in 20-9-525 the amount of earnings, excluding unrealized gains and losses, required to meet the
  obligations of the state that are payable from the account. Earnings not transferred to the account established
  in 20-9-525 must be retained in the school facilities fund.
          (5)      (a) From July 1, 2005, through June 30, 2025 2035, the state treasurer shall quarterly transfer
  to the big sky economic development fund 25% of the amount in the coal severance tax bond fund in excess of
  the amount that is specified in subsection (2) to be retained in the fund.
          (b)      The state treasurer shall monthly transfer from the big sky economic development fund to the
  economic development special revenue account, provided for in 90-1-205, the amount of earnings, excluding
  unrealized gains and losses, required to meet the obligations of the state that are payable from the account in
  accordance with 90-1-204. Earnings not transferred to the economic development special revenue account
  must be retained in the big sky economic development fund.
          (6)      Any amount in the coal severance tax bond fund in excess of the amount that is specified in
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68th Legislature 2023                                                                                              HB 881.1
  subsection (2)(a) to be retained in the fund and that is not otherwise allocated under this section must be
  deposited in the coal severance tax permanent fund."
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          Section 2. Section 17-6-407, MCA, is amended to read:
          "17-6-407.     Microbusiness development loan account and finance program administrative
  account -- criteria -- limitations. (1) (a) There is in the state special revenue fund a microbusiness
  development loan account into which funds allocated for that purpose and money received in repayment of the
  principal of development loans must be deposited.
          (b)        The department may make development loans from the account to a certified microbusiness
  development corporation.
          (c)     Interest earned on the account must be deposited in the microbusiness finance program
  administrative account established in subsection (2).
          (2)        There is in the state special revenue fund a microbusiness finance program administrative
  account into which an economic development state special revenue account created in 90-1-205 in which the
  following money must be deposited:
          (a)        all interest received on development loans received directly from microbusiness development
  corporations;
          (b)        service charges or fees received from certified microbusiness development corporations;
          (c)        grants, donations, and private or public income; and
          (d)        all interest earned on money in the account and interest earned on money in the account
  provided for in subsection (1)(a).
          (3)     Money in the administrative account may be transferred to the development loan account or be
  used to pay the costs of the program, including personnel, travel, equipment, supplies, consulting costs, and
  other operating expenses of the program.
          (4)(3)     Subject to subsection (1), a certified microbusiness development corporation that receives a
  development loan may apply for an additional loan if the applicant meets the performance criteria established
  by the department.
          (5)(4)     To establish the criteria for making development loans, the department shall consider:
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68th Legislature 2023                                                                                               HB 881.1
          (a)      the plan for providing services to microbusinesses;
          (b)      the scope of services to be provided by the certified microbusiness development corporation;
          (c)      the geographic representation of all regions of the state, including urban, rural, and tribal
  communities;
          (d)      the plan for providing service to minorities, women, and low-income persons;
          (e)      the ability of the corporation to provide business training and technical assistance to
  microbusiness clients;
          (f)      the ability of the corporation, with a plan, to:
          (i)      monitor and provide financial oversight of recipients of microbusiness loans;
          (ii)     administer a revolving loan fund; and
          (iii)    investigate and qualify financing proposals and to service credit accounts;
          (g)      sources and sufficiency of operating funds for the certified microbusiness development
  corporation; and
          (h)      the intent of the corporation, with a plan and written indications of local institutional support, to
  provide services to a designated multicounty region of the state.
          (6)(5)   Development loan funds may be used by a certified microbusiness development corporation to:
          (a)      satisfy matching fund requirements for other state, federal, or private funding only if funding is
  intended and used for the purpose of providing or enhancing the certified microbusiness development
  corporation's ability to provide and administer loans, technical assistance, or management training to
  microbusinesses;
          (b)      establish a revolving loan fund from which the certified microbusiness development corporation
  may make loans to qualified microbusinesses, provided that a single loan does not exceed $100,000 and the
  outstanding balance of all loans to a microbusiness or a project participated in by more than one microbusiness
  or to two or more microbusinesses in which any one person holds more than a 20% equity share does not
  exceed $100,000;
          (c)      establish a guarantee fund from which the certified microbusiness development corporation
  may guarantee loans made by financial institutions to qualified microbusinesses. However, a single guarantee
  may not exceed $100,000, and the aggregate of all guarantees to a microbusiness or a project participated in
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68th Legislature 2023                                                                                            HB 881.1
  by more than one microbusiness or to two or more microbusinesses in which any one person holds more than a
  20% equity share may not exceed $100,000.
          (7)(6)   Development loan funds may not be:
          (a)      loaned for relending or investment in stocks, bonds, or other securities or for property not
  intended for use in production by the recipient of the loan; or
          (b)      used to:
          (i)      refinance a nonperforming loan held by a financial institution; or
          (ii)     pay the operating costs of a certified microbusiness development corporation. However,
  interest income earned from the proceeds of a development loan may be used to pay operating expenses.
          (8)(7)   Certified microbusiness development corporations are required to contribute cash from other
  sources to leverage and secure development loans from the program. Contributions provided by the
  corporation must be on a ratio of at least $1 from other sources for each $6 from the program. These
  contributions may come from a public or private source other than the program and may be in the form of equity
  capital, loans, or grants.
          (9)(8)   Development loans must be made pursuant to a development loan agreement and may be
  amortization or term loans, bear interest at less than the market rate, be renewable, be callable, and contain
  other terms and conditions considered appropriate by the department and that are consistent with the purposes
  of and with rules promulgated to implement this part.
          (10)(9) Each certified microbusiness development corporation that receives a development loan under
  this part shall provide the department with an annual audit from an independent certified public accountant. The
  audit must cover all of the microbusiness development corporation's activities and must include verification of
  compliance with require