Bill Summary – FastDemocracy

Unofficial Draft Copy
****                                              As of: 11/15/2024, 01:48:51
69th Legislature 2025                             Drafter: Pad McCracken, ****                                     LC 0050
                                                   **** BILL NO. ****
                                                INTRODUCED BY ****
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  A BILL FOR AN ACT ENTITLED: “AN ACT ***; AMENDING SECTIONS 15-30-3110, 15-30-3111, AND 17-5-
  703, MCA.”
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  BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:
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          Section 1. Section 15-30-3110, MCA, is amended to read:
          "15-30-3110.    (Temporary) Credit for providing supplemental funding to public schools --
  innovative educational program. (1) Subject to subsection (4), a taxpayer or corporation is allowed a credit
  against the tax imposed by chapter 30 or 31 for donations made to a school district for the purpose of providing
  supplemental funding to the school district for innovative educational programs. The amount of the credit
  allowed is equal to the amount of the donation, not to exceed $200,000.
          (2)      (a) If the credit allowed under this section is claimed by a small business corporation, a pass-
  through entity, or a partnership, the credit must be attributed to shareholders, owners, or partners using the
  same proportion as used to report the entity's income or loss.
          (b)      A donation by an estate or trust qualifies for the credit. Any credit not used by the estate or trust
  may be attributed to each beneficiary of the estate or trust in the same proportion used to report the
  beneficiary's income from the estate or trust for Montana income tax purposes.
          (3)      The credit allowed under this section may not exceed the taxpayer's income tax liability but
  may be carried forward 3 years. The entire amount of the tax credit not used in the year earned must be carried
  first to the earliest tax year in which the credit may be applied and then to each succeeding tax year.
          (4)      (a) (i) The aggregate amount of tax credits allowed under this section is $2 million per year in
  tax year 2023 and $5 million per year in tax year 2024 and subsequent tax years except as provided in this
  subsection (4)(a).
          (ii)     Beginning in 2024, by December 31 of each year, the department shall determine if 80% of the
  aggregate limit provided for in subsection (4)(a)(iii) in donations was preapproved by the department. If this
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69th Legislature 2025                                 Drafter: Pad McCracken, ****                                    LC 0050
  condition is satisfied, the aggregate amount of tax credits allowed for succeeding tax years must be increased
  by 20% for the succeeding tax years plus an amount equal to 50% of the earnings transferred to the general
  fund from the educational opportunity fund within the coal severance tax trust pursuant to 17-5-703.
           (iii)       If the aggregate limit is increased in any tax year, the department shall use the new limit as the
  base aggregate limit for succeeding tax years until a new aggregated limit is established under the provisions of
  subsection (4)(a)(ii).
           (b)         The aggregate limit under this subsection (4) applies to the year in which a donation is made
  regardless of whether the full credit is claimed in that tax year or carried forward.
           (5)         A credit is not allowed under this section with respect to any amount deducted by the taxpayer
  for state tax purposes as a charitable contribution to a charitable organization qualified under section 501(c)(3)
  of the Internal Revenue Code, 26 U.S.C. 501(c)(3). This section does not prevent a taxpayer from:
           (a)         claiming a credit under this section instead of a deduction; or
           (b)         claiming an exclusion, deduction, or credit for a charitable contribution that exceeds the amount
  for which the credit is allowed under this section.
           (6)         (a) On receiving a donation under this part, a school district shall seek preapproval, in a
  manner prescribed by the department, that the amount of tax credit sought by the taxpayer is available under
  the aggregate limit under subsection (4).
           (b)         On preapproval by the department, a school district shall issue a receipt, in a form prescribed
  by the department, to each contributing taxpayer indicating the value of the donation received and preapproval
  of the tax credit.
           (c)         A taxpayer shall provide a copy of the receipt when claiming the tax credit.
           (7)         (a) A school district may not retain donations under this section that exceed either:
           (i)         the greater of $50,000 or 15% of the school district's maximum general fund budget; or
           (ii)        20% of the total aggregate amount provided for in subsection (4).
           (b)         If a school district receives donations that exceed the amounts provided for in subsection
  (7)(a), the school district shall remit the excess funds within 30 days to the superintendent of public instruction
  for deposit in the account provided for in 20-9-250.
           (c)         The superintendent of public instruction shall distribute funds received under subsection (7)(b)
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****                                               As of: 11/15/2024, 01:48:51
69th Legislature 2025                              Drafter: Pad McCracken, ****                                      LC 0050
  to school districts as described in 20-9-250. A school district shall deposit funds received under this subsection
  (7)(c) into the school district flexibility fund and use them for out-of-pocket pupil costs provided for in 20-7-
  1506(5)(a).
          (8)      A school district shall deposit retained donations into the school district's miscellaneous
  programs fund and shall limit the expenditure of the donation to expenditures for innovative educational
  programs of the school district. (Terminates December 31, 2029--sec. 20, Ch. 480, L. 2021, sec. 7, Ch. 558, L.
  2023, sec. 12, Ch. 558, L. 2023.)"
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          Section 2. Section 15-30-3111, MCA, is amended to read:
          "15-30-3111.     (Temporary) Qualified education tax credit for donations to student scholarship
  organizations. (1) Subject to subsection (4), a taxpayer or corporation is allowed a credit against the tax
  imposed by chapter 30 or 31 for donations made to a student scholarship organization. The donor may not
  direct or designate donations to a parent, legal guardian, or specific qualified education provider. The amount of
  the credit allowed is equal to the amount of the donation, not to exceed $200,000.
          (2)      (a) If the credit allowed under this section is claimed by a small business corporation, a pass-
  through entity, or a partnership, the credit must be attributed to shareholders, owners, or partners using the
  same proportion as used to report the entity's income or loss.
          (b)      A donation by an estate or trust qualifies for the credit. Any credit not used by the estate or trust
  may be attributed to each beneficiary of the estate or trust in the same proportion used to report the
  beneficiary's income from the estate or trust for Montana income tax purposes.
          (3)      The credit allowed under this section may not exceed the taxpayer's income tax liability but
  may be carried forward 3 years. The entire amount of the tax credit not used in the year earned must be carried
  first to the earliest tax year in which the credit may be applied and then to each succeeding tax year
          (4)      (a) (i) The aggregate amount of tax credits allowed under this section is $2 million per year in
  tax year 2023 and $5 million per year in tax year 2024 and subsequent tax years except as provided in this
  subsection (4)(a).
          (ii)     Beginning in 2024, by December 31 of each year, the department shall determine if 80% of the
  aggregate limit provided for in subsection (4)(a)(iii) in tax credits was preapproved by the department. If this
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                                                    Unofficial Draft Copy
****                                               As of: 11/15/2024, 01:48:51
69th Legislature 2025                              Drafter: Pad McCracken, ****                                   LC 0050
  condition is satisfied, the aggregate limit of tax credits allowed for succeeding tax years must be increased by
  20% for the succeeding tax years plus an amount equal to 50% of the earnings transferred to the general fund
  from the educational opportunity fund within the coal severance tax trust pursuant to 17-5-703.
          (iii)    If the aggregate limit is increased in any tax year, the department shall use the new limit as the
  aggregate limit for succeeding tax years until a new aggregated limit is established under the provisions of
  subsection (4)(a)(ii).
          (b)      The aggregate limit under this subsection (4) applies to the year in which a donation is made
  regardless of whether the full credit is claimed in that tax year or carried forward.
          (5)      A credit is not allowed under this section with respect to any amount deducted by the taxpayer
  for state tax purposes as a charitable contribution to a charitable organization qualified under section 501(c)(3)
  of the Internal Revenue Code, 26 U.S.C. 501(c)(3). This section does not prevent a taxpayer from:
          (a)      claiming a credit under this section instead of a deduction; or
          (b)      claiming an exclusion, deduction, or credit for a charitable contribution that exceeds the amount
  for which the credit is allowed under this section.
          (6)      (a) On receiving a donation under this part, a student scholarship organization shall seek
  preapproval, in a manner prescribed by the department, that the amount of tax credit sought by the taxpayer is
  available under the aggregate limit under subsection (4).
          (b)      On preapproval by the department, a student scholarship organization shall issue a receipt, in
  a form prescribed by the department, to each contributing taxpayer indicating the value of the donation received
  and preapproval of the tax credit.
          (c)      A taxpayer shall provide a copy of the receipt when claiming the tax credit. (Terminates
  December 31, 2029--sec. 20, Ch. 480, L. 2021, sec. 7, Ch. 558, L. 2023, sec. 12, Ch. 558, L. 2023.)"
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          Section 3. 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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69th Legislature 2025                               Drafter: Pad McCracken, ****                                     LC 0050
          (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;
          (g)      a school facilities fund;
          (h)      a conservation district fund; and
          (i)      a coal board fund;
          (j)      an educational opportunity 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) through (6).
          (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, 2023, the state treasurer shall quarterly transfer to the school facilities fund
  provided for in 20-9-380(1) 10% 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
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69th Legislature 2025                              Drafter: Pad McCracken, ****                                         LC 0050
  when the balance of the school facilities fund is $300 million. Beginning with the quarter following this
  certification, the state treasurer shall instead transfer to the coal severance tax permanent fund 10% 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) Starting July 1, 2023, the state treasurer shall quarterly transfer to the conservation district
  fund provided for in 76-15-108 65% 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 conservation district fund is $100 million. Beginning with the quarter following
  this certification, the state treasurer shall instead transfer to the coal board fund 65% 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.
  The budget director shall certify to the state treasurer when the balance of the coal board fund reaches $150
  million. Beginning with the quarter following this certification, the state treasurer shall instead transfer to the
  Montana coal endowment fund 65% 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 conservation district fund to the account
  established in 76-15-106 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 76-15-106 must be retained in the conservation district fund.
          (c)      The state treasurer shall monthly transfer from the coal board fund to the account established
  in 90-6-1001(2) 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 90-6-
  1001(2) must be retained in the coal board fund.
          (6)      (a) From July 1, 2005, through June 30, 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
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                                                    Unofficial Draft Copy
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