Members of the House Appropriations Subcommittee F opened a hearing on House Bill 11, a funding bill that would use interest earnings from Montana’s coal severance endowment to finance local infrastructure grants.

Rep. John Fitzpatrick, the bill sponsor, told the subcommittee HB 11 would appropriate $20,300,000 for 33 water and wastewater projects, about $3,500,000 for bridge rehabilitation projects, $150,000 for emergency Commerce grants, $1,500,000 for planning grants and $10,000,000 to the Department of Natural Resources and Conservation for regional water system projects. Fitzpatrick said the payments would come from interest on the coal severance endowment and related trust accounts.

The committee heard a technical briefing from Sam Schaeffer, lead revenue analyst at the Legislative Fiscal Division, who explained how coal severance tax collections feed multiple state funds and trusts. Schaeffer said fiscal 2024 coal severance collections totaled about $77.1 million and that Montana’s constitution requires at least 50% of those collections be deposited into the coal trust; he said roughly $38.6 million was deposited in fiscal 2024. Schaeffer described the trust structure — a large permanent fund and several sub‑trusts created by statute — and said the consolidated trust balance was roughly $1.3 billion at the snapshot he used. He told the panel the trust’s fixed‑income investments produced a collective return of about 3.86% last year and that interest earnings are deposited into an income fund until the legislature appropriates them.

Commerce staff and program managers outlined how the Montana Coal Endowment Program (MCEP) evaluates and contracts grants. Becky Anseth, infrastructure program manager at the Department of Commerce, described the program’s “startup conditions” required before a grant contract is executed: an updated project budget, an implementation schedule, a management plan, compliance with local auditing and reporting requirements, and commitments for other funding sources. Commerce staff told the subcommittee they report annually on projects that had not met startup conditions and invited those applicants to testify.

The subcommittee decided not to rehear testimony from several projects that Commerce confirmed had met startup conditions since the September report. The projects excused from testifying included Bigfork, Boulder, Hideaway Water and Sewer District, Geraldine, Lockwood, and Thompson Falls; two projects — Corvallis and the Drummond bridge offer — had been withdrawn and were noted as such.

Why it matters: HB 11 distributes interest earnings from a constitutionally protected coal endowment and thereby converts investment income into local infrastructure aid. Committee members pressed staff on the durability of trust earnings, statutory limits on distributions and on the criteria used to rank and target assistance to especially small and low‑income communities.

Subcommittee staff said there were no formal votes recorded at the hearing segment covered; lawmakers asked Commerce for follow‑up materials on how the “target rate” used in grant scoring is calculated and asked LFD for a multi‑year history of coal severance receipts to provide broader context for appropriations decisions.

Ending: The subcommittee continued project‑level testimony. Staff promised to provide written follow‑ups on the target‑rate calculation and a detailed history of coal severance collections. The committee scheduled additional hearing time to consider remaining applicants and to review the revenue history behind the coal trust.