Tuesday, April 26, 2011

The "Facts" on Northern's Bonding Bill

The Corrector just received a short update on MSU –Northern’s proposed funding for the Diesel Facility from HD 33 Representative Kris Hansen.  When it comes to funding for the university system is the “All or Nothing” approach really the best for the system as a whole?  Read Representative Hansen’s letter and tell us what you think.
The Bonding Bill
I am getting many questions about what is going on with HB 439, better known as the “Bonding Bill.” Emails have been circulating that Representative Warburton and I have “voted against Northern.” This is not true. If we had voted differently, we know the bill would have died on the floor that day. We did not have the votes to pass it.

The bonding bill originally introduced did not include Northern. Representative Belcourt, who is on the Appropriations Committee, introduced an amendment and Representative Warburton testified at the hearing. Northern’s building was successfully amended into the bill.

However, Northern’s project is now part of a huge bill that has a $97.8 million dollar price tag. And that price tag is not just writing a check and spending money. That price tag is for the state to issue bonds and put the state in debt. The state would be on the hook for principal and interest payments for twenty years. Additionally, there will be operations and maintenance costs to the state of upwards of $10 million per year. The price of the bonding bill is a huge debt of the state and unpalatable to many republicans in a time when the federal debt has topped 14 trillion and our nation as a whole is losing fiscal credibility worldwide. Additionally, many of the projects look and smell a lot like pork, making it very unlikely we could get a 2/3 majority of the House of Representatives to vote for it.

Knowing this was the case, I asked Chancellor Trocki in late February if he would like me to bring a bill seeking an appropriation just for Northern. An appropriation is not debt. An appropriation says we have money we are willing to spend right now with no debt. Several fiscally conservative republicans have confirmed to me that they see Northern’s diesel program as beneficial to the state as a whole, especially given the oil boom in the east where trucks and equipment need qualified mechanics to ensure progress in the oil fields. I am confident I had at least a reasonable chance to get an appropriation bill passed. However, Frank spoke with “the system,” some unnamed “they” who told him to “toe-the-line” and not seek anything for Northern outside of what the U-system was supporting. I did not bring the bill based on that answer. In hindsight, that was clearly a mistake on my part, and I expect Frank Trocki may now believe it was a mistake on his part also.

Still uncertain that the big bonding bill could pass the House, in mid-march, I called Regent Lynn Hamilton to discuss a new bonding bill. I asked her about what the university system’s priorities are. I had a second bonding bill drafted based on the regents’ priorities. That bill is HB 635. It includes new facilities for Northern, the Missoula COT, and MSU-Billings. It also includes five deferred maintenance projects including $1 million in renovations at the ag experiment stations.

The hearing on HB 635 was held on March 24. No one from the U-system showed up in support of the bill. No one. The U-system made a decision to support only the big bill and did not even testify in support of a bill that included projects taken directly from its own priority list.

Last week, I spoke with the sponsor of the big bill. I told him I was still concerned that some of the “pork” projects in the bill would kill the bill. He told me to just stop talking about it and vote for the bill. He said “this is the process, you have to give to get.” Now we are facing a final vote and the bill, including Northern's project, may die in the House.

My take on this whole mess is this. The “process” isn’t going to work anymore. Montanans and the rest of the country are waking up to free-for-all spending and government debt. Necessary projects are worthy of funding. Unnecessary projects are not. Fiscal conservatives will no longer vote “green” just to get their district a pork project. We can’t afford it. I will be as disappointed as anyone if Northern’s building is not built. But the U-system didn’t play its cards right on this one. They squelched the initiative of a motivated chancellor and a rookie representative in favor of an “all-or-nothing” approach. That may very well hurt Northern and the Hi-Line this week.

Representative Kris Hansen

Corrector note -- In addition the following is what the two bonding bills would have paid for.  The All or Nothing bill is HB 439 and Hansen's Compromise bill which the university folks snubbed their nose at is HB 635.  Compare the two and tell our readers how you think Northern would have faired if the University system would have been somewhat reasonable

HB 439 (the big bill or what has come to be known as the Bonding Bill):
1) combined state labs, $6.7 million,
2) Montana heritage center, Helena, $23 million,
3) MSU-Billings, science building, $14.25 million,
4) MSU-Bozeman, classroom renovations, $2.5 million,
5) MSU-Bozeman Ag stations, $1 million,
6) MSU-Great Falls COT, Ag building, $4 million,
7) Veterans’ Home, Butte, $5 million,
8) UM-Missoula COT, new building, $29 million,
9) UM Western, main hall, $4.45 million
10) MSU-Northern, diesel facility, $7.9 million.
Total $97.8 million

HB 635 (Hansen's alternative appropriations bill):
1) UM-Helena COT, lab renovation $150,000,
2) UM-Butte, library renovation $2 million,
3) MSU-Billings, science building, $12.5 million,
4) MSU-Bozeman, Ag stations, $1 million,
5) MSU-Great Falls COT, roof, $600,000,
6) UM-Missoula COT, new facility, $25 million,
7) UM-Western, main hall earthquake damage, 2.2 million,
8) MSU-Northern, diesel facility, $7.5 million.
Total $50.95 million.


  1. It is pretty simple. If our legislators vote to fund all these projects worth 100 million the rest of the state will throw us back a bone of 7-8 million or so to buy the vote and fund our diesel building. No mention is made that we all will not only be forced to pay the whole 100 million back but also the interest over the next 20 years

    These types of deals are why we will never get our debt under control

  2. I can't argue with Chris' letter. Why not pay as we go. There's no need to have to float bonds and pay interest on the debt.
    It's time all parts of the government have to do what the rest of us are doing. Make do with what you have. We can do just fine with out a $23 million heritage center.

  3. This political posturing with a tea bagging slant fails to mention that-

    1. The State of Montana has much more money than this sitting in investment accounts, most of which came from the tremedous foresight of past legislatures that established the Coal Tax Severence Fund.

    2. Under the Montana State Constitution, the state is REQUIRED to operate under a balanced budget. The fact that Rep Hansen is comparing the use of funding this expenditure through a bond (which is how it has been done for a long, long time) to the national debt is dishonest, inciderary, unstatesmanlike, and certainly unhelpful.

    This is once again political spin to feed the tea baggers who do not want to fund ANYTHING, regardless of how beneficial it may be to our society.

  4. Actually DeCon we need to correct your record a bit.

    Most of the projects on the list were University projects and quite frankly the bulk of most of the building on campuses for the last several decades has been done in either public/private ventures or entirely with private monies.

    State buildings have used bonds in the past, but most municipal and state bonding is actually for infrastructure financing, i.e. bridges, water treatment plants, sewer treatment plants, etc.

    Oh and the Coal Severence Tax Trust cannot be used for the financing of buildings, so it isn't really an investment account as you state. There are a number of subfunds if you will that divert interest to certain benefiting programs such as TSEP or Treasure State Endowment Program which also funds many of those infrastructure projects mentioned above for various projects around the state.

    I say if we can't get the funding for our facility without buying the votes from others by supporting their pork projects too, then call it what it is, pork. Unfortunatley for Northern, their project got caught in the political horsetrading of the Old Helena Two-Step!

  5. Selling bonds is exactly the same as deficit spending. It's putting a projects cost on a credit card.
    Our family has found that once you pay off all debts you can buy what you want when you need it and pay cash. It leaves more of our income in our pocket.
    The interest rates on bonds is low, but why should we give up even a few percentage points so the bankers can make money on the taxpayers back.
    The only reason I can see the state taking out a bond to pay for would be a huge energy project. A project that would benefit the state and return our investment with a profit. Coal to oil?
    Otherwise I think it should be cash and carry.

  6. @the Professor

    I was not suggesting raiding the Coal Fund for these projects. Obviously that is not possible, once again due to the tremendous foresight of the legislatures that enacted this great Montana investment.

    Rather I was attempting to bring some facts that were obviously intentially omitted in this letter from one of our local representatives.

    In the bigger picture, since now some tea baggers have actually had the audacity to suggest that 'volunteers' fix Havre streets, it is obvious that this faction, and the political forces guiding and inciting them, have intentions of the total dismantling of all government services.

    Some of us are proud to be liberal, think we should all pay MORE taxes, and hope that saner minds will prevail for the future of Montana.

    A bond is not a 'credit card'. My guess (and please feel free to correct me if I am wrong) is that the money tied up in the Coal Fund is earning more interest than what would be paid on these bonds, as rates are low right now.

    However, this letter, from Rep Hansen, is a political move (as she brought up the Fed Debt)to smooth things over with local voters who have just lost a tremendous local asset for MSU Northern and the Havre community.

    The tea baggers won this one. MSU Northern, Havre, and Montana all lost.

  7. Is everyone you disagree with automatically a tea bagger Decon? Can you really label fuel burner a tea bagger because he offered a rational solution to a problem? You are quick to flip out that label like it is a derogatory term but I am glad this bill failed. Why should I be paying the mortgage payments on 100 million worth of building projects when I am only receiving 8 million dollars worth? It doesn’t even make sense but if that makes me one of your despised tea baggers so be it.

  8. OMG! Not the total dismantling of all government services! The horror!
    What would we do with all that money we would save on taxes?
    Why would the thought of residents fixing their own problems scare you? Inquiring minds want to know!

  9. I am glad this bond failed

    It was too high a price to pay for Havre to get a measly 7 million

    I hope the mill levy fails also