Montana SB 530

1999 Montana Legislature

SENATE BILL NO. 530

INTRODUCED BY A. BISHOP

AN ACT GENERALLY REVISING THE TAXATION OF OIL AND NATURAL GAS PRODUCTION; REVISING THE DEFINITION OF "QUALIFYING PRODUCTION" AND DEFINITIONS RELATED TO WELLS; SHORTENING THE TIME PERIOD FOR LOWER TAX RATES FOR QUALIFYING PRODUCTION; REVISING TAX RATES APPLIED TO OIL AND NATURAL GAS PRODUCTION; PROVIDING A TAX INCENTIVE FOR HORIZONTALLY COMPLETED NATURAL GAS WELLS; ESTABLISHING UNIFORM TAX RATES FOR NONWORKING INTEREST OWNERS; REVISING THE DISTRIBUTION OF OIL AND GAS PRODUCTION TAXES; PROVIDING A 1-YEAR PHASEIN OF CERTAIN PROVISIONS; AMENDING SECTIONS 15-36-303, 15-36-304, 15-36-324, 15-36-326, 17-7-502, 20-9-104, 20-9-161, 20-9-331, 20-9-333, 20-9-501, AND 20-9-507, MCA; REPEALING SECTIONS 15-36-323 AND 15-36-325, MCA; AND PROVIDING EFFECTIVE DATES, APPLICABILITY DATES, AND A TERMINATION DATE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MONTANA:

Section 1. Section 15-36-303, MCA, is amended to read:

"15-36-303. Definitions. As used in this part, the following definitions apply:

(1) "Board" means the board of oil and gas conservation provided for in 2-15-3303.

(2) "Department" means department of revenue provided for in 2-15-1301;

(3) "Enhanced recovery project" means the use of any process for the displacement of oil from the earth other than primary recovery and includes the use of an immiscible, miscible, chemical, thermal, or biological process.

(4) "Existing enhanced recovery project" means an enhanced recovery project that began development before January 1, 1994.

(5) "Expanded enhanced recovery project" or "expansion" means the addition of injection wells or production wells, the recompletion of existing wells as horizontally completed wells, the change of an injection pattern, or other operating changes to an existing enhanced recovery project that will result in the recovery of oil that would not otherwise be recovered. The project must be developed after December 31, 1993, and before January 1, 2002.

(6) "Gross taxable value", for the purpose of computing the oil and natural gas production tax, means the gross value of the product as determined in 15-36-305.

(7) "Horizontal drain hole" means that portion of a well bore with 70 degrees to 110 degrees deviation from the vertical and a horizontal projection within the common source of supply, as that term is defined by the board, that exceeds 100 feet.

(8) "Horizontally completed well" means:

(a) a well with one or more horizontal drain holes; and

(b) any other well classified by the board as a horizontally completed well.

(9) "Incremental production" means:

(a) the volume of oil produced by a new enhanced recovery project, by a well in primary recovery recompleted as a horizontally completed well, or by an expanded enhanced recovery project, which volume of production is in excess of the production decline rate established under the conditions existing before:

(i) the commencement of the recompletion of a well as a horizontally completed well;

(ii) expansion of the existing enhanced recovery project; or

(iii) commencing a new enhanced recovery project; or

(b) in the case of any project that had no taxable production prior to commencing the enhanced recovery project, all production of oil from the enhanced recovery project.

(10) "Natural gas" or "gas" means natural gas and other fluid hydrocarbons, other than oil, produced at the wellhead.

(11) "New enhanced recovery project" means an enhanced recovery project that began development after December 31, 1993, and before January 1, 2002.

(12) "Nonworking interest owner" means any interest owner who does not share in the exploration, development, and operation costs of the lease or unit, except for production taxes.

(13) "Oil" means crude petroleum or mineral oil and other hydrocarbons, regardless of gravity, that are produced at the wellhead in liquid form and that are not the result of condensation of gas after it leaves the wellhead.

(14) "Operator" or "producer" means a person who produces oil or natural gas within this state or who owns, controls, manages, leases, or operates within this state any well or wells from which any marketable oil or natural gas is extracted or produced.

(15) "Post-1985 well" means an oil or natural gas well drilled after June 30, 1985, but before January 1, 1999, other than horizontally completed or recompleted oil wells drilled after December 31, 1993, but before January 1, 1999, that produces oil or natural gas or a well that has not produced oil or natural gas during the 5 years immediately preceding the first month of qualifying as a post-1985 well.

(16) "Pre-1985 well" means an oil or natural gas well that was drilled before July 1, 1985.

(17) "Post-1999 well" means an oil or natural gas well drilled on or after January 1, 1999, that produces oil or natural gas or a well that has not produced oil or natural gas during the 5 years immediately preceding the first month of qualifying as a post-1999 well.

~~(17)~~(18) "Primary recovery" means the displacement of oil from the earth into the well bore by means of the natural pressure of the oil reservoir and includes artificial lift.

~~(18)~~(19) "Production decline rate" means the projected rate of future oil production, extrapolated by a method approved by the board, that must be determined for a project area prior to commencing a new or expanded enhanced recovery project or the recompletion of a well as a horizontally completed well. The approved production decline rate must be certified in writing to the department by the board. In that certification, the board shall identify the project area and shall specify the projected rate of future oil production by calendar year and by calendar quarter within each year. The certified rate of future oil production must be used to determine the volume of incremental production that qualifies for the tax rate imposed under 15-36-304(4)(d).

~~(19)~~(20) (a) "Qualifying production" means:

(i) the first 24 months of production of oil or natural gas from any post-1985 well drilled after March 31, 1995, but before January 1, 1999, or from a well that has not produced oil or natural gas during the 5 years immediately preceding the first month of qualifying production.; or

(ii) the first 12 months of production of oil or natural gas from a well drilled on or after January 1, 1999, or the first 18 months of production of oil or natural gas from a horizontally completed well drilled on or after January 1, 1999, or from a well that has not produced oil or natural gas during the 5 years immediately preceding the first month of qualifying production.

(b) Qualifying production does not include oil production from a horizontally recompleted well.

~~(20)~~(21) "Secondary recovery project" means an enhanced recovery project, other than a tertiary recovery project, that commenced or was expanded after December 31, 1993, and before January 1, 2002, and meets each of the following requirements:

(a) The project must be certified as a secondary recovery project to the department by the board. The certification may be extended only after notice and hearing in accordance with Title 2, chapter 4.

(b) The property to be affected by the project must be adequately delineated according to the specifications required by the board.

(c) The project must involve the application of secondary recovery methods that can reasonably be expected to result in an increase, determined by the board to be significant in light of all the facts and circumstances, in the amount of oil that may potentially be recovered. For purposes of this part, secondary recovery methods include but are not limited to:

(i) the injection of water into the producing formation for the purposes of maintaining pressure in that formation or for the purpose of increasing the flow of oil from the producing formation to a producing well bore; or

(ii) any other method approved by the board as a secondary recovery method.

~~(21)~~(22) "Stripper exemption" means the first 3 barrels a day for petroleum and other mineral or crude oil produced by a stripper well if the average price per barrel of oil as reported in the Wall Street Journal for west Texas intermediate crude oil during a calendar quarter is less than $30 a barrel. If the price of oil is equal to or greater than $30 a barrel in a calendar quarter, there is no stripper exemption in that quarter. The average price per barrel is computed by dividing the sum of the daily price for west Texas intermediate crude oil as reported in the Wall Street Journal for the calendar quarter by the number of days on which the price was reported in the quarter.

~~(22)~~(23) "Stripper natural gas" means the natural gas produced from any well that produces less than 60,000 cubic feet of natural gas a day during the calendar year immediately preceding the current year. Production must be determined by dividing the amount of production from a lease or unitized area for the year immediately preceding the current calendar year by the number of producing wells in the lease or unitized area and by dividing the resulting quotient by 365.

~~(23)~~(24) "Stripper oil" means the oil produced from any well that produces less than 10 barrels a day for the calendar year immediately preceding the current year. Production must be determined by dividing the amount of production from a lease or unitized area for the year immediately preceding the current calendar year by the number of producing wells in the lease or unitized area and by dividing the resulting quotient by 365.

~~(24)~~(25) "Tertiary recovery project" means an enhanced recovery project, other than a secondary recovery project, using a tertiary recovery method that meets the following requirements:

(a) The project must be certified as a tertiary recovery project to the department by the board. The certification may be extended only after notice and hearing in accordance with Title 2, chapter 4.

(b) The property to be affected by the project must be adequately delineated in the certification according to the specifications required by the board.

(c) The project must involve the application of one or more tertiary recovery methods that can reasonably be expected to result in an increase, determined by the board to be significant in light of all the facts and circumstances, in the amount of crude oil that may potentially be recovered. For purposes of this part, tertiary recovery methods include but are not limited to:

(i) miscible fluid displacement;

(ii) steam drive injection;

(iii) micellar/emulsion flooding;

(iv) in situ combustion;

(v) polymer augmented water flooding;

(vi) cyclic steam injection;

(vii) alkaline or caustic flooding;

(viii) carbon dioxide water flooding;

(ix) immiscible carbon dioxide displacement; or

(x) any other method approved by the board as a tertiary recovery method.

~~(25)~~(26) "Well" or "wells" means a single well or a group of wells in one field or production unit and under the control of one operator or producer.

~~(26)~~(27) "Working interest owner" means the owner of an interest in an oil or natural gas well or wells who bears any portion of the exploration, development, and operating costs of the well or wells."

Section 2. Section 15-36-303, MCA, is amended to read:

"15-36-303. Definitions. As used in this part, the following definitions apply:

(1) "Board" means the board of oil and gas conservation provided for in 2-15-3303.

(2) "Department" means department of revenue provided for in 2-15-1301;

(4) "Existing enhanced recovery project" means an enhanced recovery project that began development before January 1, 1994.

(6) "Gross taxable value", for the purpose of computing the oil and natural gas production tax, means the gross value of the product as determined in 15-36-305.

(8) "Horizontally completed well" means:

(a) a well with one or more horizontal drain holes; and

(b) any other well classified by the board as a horizontally completed well.

(9) "Incremental production" means:

(i) the commencement of the recompletion of a well as a horizontally completed well;

(ii) expansion of the existing enhanced recovery project; or

(iii) commencing a new enhanced recovery project; or

(b) in the case of any project that had no taxable production prior to commencing the enhanced recovery project, all production of oil from the enhanced recovery project.

(10) "Natural gas" or "gas" means natural gas and other fluid hydrocarbons, other than oil, produced at the wellhead.

(11) "New enhanced recovery project" means an enhanced recovery project that began development after December 31, 1993, and before January 1, 2002.

(12) "Nonworking interest owner" means any interest owner who does not share in the exploration, development, and operation costs of the lease or unit, except for production taxes.

(15) ~~"Post-1985~~ "Post-1999 well" means an oil or natural gas well drilled ~~after June 30, 1985, other than horizontally completed or recompleted oil wells drilled after December 31, 1993,~~ on or after January 1, 1999, that produces oil or natural gas or a well that has not produced oil or natural gas during the 5 years immediately preceding the first month of qualifying as a ~~post-1985~~ post-1999 well.

(16) ~~"Pre-1985~~ "Pre-1999 well" means an oil or natural gas well that was drilled before ~~July 1, 1985~~ January 1, 1999.

(17) "Primary recovery" means the displacement of oil from the earth into the well bore by means of the natural pressure of the oil reservoir and includes artificial lift.

(18) "Production decline rate" means the projected rate of future oil production, extrapolated by a method approved by the board, that must be determined for a project area prior to commencing a new or expanded enhanced recovery project or the recompletion of a well as a horizontally completed well. The approved production decline rate must be certified in writing to the department by the board. In that certification, the board shall identify the project area and shall specify the projected rate of future oil production by calendar year and by calendar quarter within each year. The certified rate of future oil production must be used to determine the volume of incremental production that qualifies for the tax rate imposed under 15-36-304~~(4)(d)~~(5)(e).

(19) "Qualifying production" means the first 24 12 months of production of oil or natural gas from ~~any post-1985~~ a well drilled after ~~March 31, 1995~~ December 31, 1998, or the first 18 months of production of oil or natural gas from a horizontally completed well drilled after December 31, 1998, or from a well that has not produced oil or natural gas during the 5 years immediately preceding the first month of qualifying production. Qualifying production does not include oil production from a horizontally recompleted well.

(20) "Secondary recovery project" means an enhanced recovery project, other than a tertiary recovery project, that commenced or was expanded after December 31, 1993, and before January 1, 2002, and meets each of the following requirements:

(b) The property to be affected by the project must be adequately delineated according to the specifications required by the board.

(ii) any other method approved by the board as a secondary recovery method.

(21) "Stripper exemption" means the first 3 barrels a day for petroleum and other mineral or crude oil produced by a stripper well if the average price per barrel of oil as reported in the Wall Street Journal for west Texas intermediate crude oil during a calendar quarter is less than $30 a barrel. If the price of oil is equal to or greater than $30 a barrel in a calendar quarter, there is no stripper exemption in that quarter. The average price per barrel is computed by dividing the sum of the daily price for west Texas intermediate crude oil as reported in the Wall Street Journal for the calendar quarter by the number of days on which the price was reported in the quarter.

(22) "Stripper natural gas" means the natural gas produced from any well that produces less than 60,000 cubic feet of natural gas a day during the calendar year immediately preceding the current year. Production must be determined by dividing the amount of production from a lease or unitized area for the year immediately preceding the current calendar year by the number of producing wells in the lease or unitized area and by dividing the resulting quotient by 365.

(23) "Stripper oil" means the oil produced from any well that produces less than 10 barrels a day for the calendar year immediately preceding the current year. Production must be determined by dividing the amount of production from a lease or unitized area for the year immediately preceding the current calendar year by the number of producing wells in the lease or unitized area and by dividing the resulting quotient by 365.

(24) "Tertiary recovery project" means an enhanced recovery project, other than a secondary recovery project, using a tertiary recovery method that meets the following requirements:

(a) The project must be certified as a tertiary recovery project to the department by the board. The certification may be extended only after notice and hearing in accordance with Title 2, chapter 4.

(b) The property to be affected by the project must be adequately delineated in the certification according to the specifications required by the board.

(i) miscible fluid displacement;

(ii) steam drive injection;

(iii) micellar/emulsion flooding;

(iv) in situ combustion;

(v) polymer augmented water flooding;

(vi) cyclic steam injection;

(vii) alkaline or caustic flooding;

(viii) carbon dioxide water flooding;

(ix) immiscible carbon dioxide displacement; or

(x) any other method approved by the board as a tertiary recovery method.

(25) "Well" or "wells" means a single well or a group of wells in one field or production unit and under the control of one operator or producer.

(26) "Working interest owner" means the owner of an interest in an oil or natural gas well or wells who bears any portion of the exploration, development, and operating costs of the well or wells."

Section 3. Section 15-36-304, MCA, is amended to read:

"15-36-304. Production tax rates imposed on oil and natural gas. (1) The production of oil and natural gas is taxed as provided in this section. The tax is distributed as provided in 15-36-324.

(2) Natural gas is taxed on the gross taxable value of production based on the type of well and type of production according to the following schedule for working interest and nonworking interest owners:

Working Nonworking

Interest Interest

(a) pre-1985 wells 18.55% 14.8%

(b) post-1985 wells

(i) first 12 months of qualifying

production 0.5% 14.8%

(ii) next 12 months of qualifying

production 12.5% 14.8%

(iii) after 24 months 15.15% 14.8%

and post-1985 wells 11% 14.8%

(d) post-1999 wells

(i) first 12 months of qualifying

production 0.5% 14.8%

(ii) after 12 months 9% 14.8%

(e) horizontally completed well production

(i) first 18 months of qualifying

production 0.5% 14.8%

(ii) after 18 months 9% 14.8%

(3) The reduced tax rates under subsections (2)(b)(i) and (2)(b)(ii) on production for the first 24 months of natural gas production from a post-1985 well and under subsection (2)(d)(i) on production for the first 12 months of natural gas production from a post-1999 well begin following the last day of the calendar month immediately preceding the month in which natural gas is placed in a natural gas distribution system, provided that notification has been given to the department.

(4) The reduced tax rate under subsection (2)(e)(i) on production from a horizontally completed well for the first 18 months of production begins following the last day of the calendar month immediately preceding the month in which natural gas is placed in a natural gas distribution system, provided that notification has been given to the department.

~~(4)~~(5) Oil is taxed on the gross taxable value of production based on the type of well and type of production according to the following schedule for working interest and nonworking interest owners:

Working Nonworking

Interest Interest

(a) primary recovery production

(i) pre-1985 wells 13.9% 16.9%

(ii) post-1985 wells

(A) first 12 months of qualifying

production 0.5% 14.8%

(B) next 12 months of qualifying

production 7.5% 14.8%

(iii) post-1999 wells

(A) first 12 months of qualifying

production 0.5% 14.8%

(B) after 12 months 9% 14.8%

(b) stripper oil production

(i) pre-1985 wells 10.5% 16.9%

(ii) post-1985 wells 10.5% 14.8%

(iii) stripper exemption production

(A) pre-1985 wells 5.5% 16.9%

(B) post-1985 wells 5.5% 14.8%

(i) post-1985 wells

~~(i)~~(A) first 18 months of qualifying

production 0.5% 5.5%

~~(ii)~~(B) next 6 months of qualifying

production 7.5% 12.5%

~~(iii)~~(C) after 24 months 12.5% 12.5%

(ii) post-1999 wells

(A) first 18 months of qualifying

production 0.5% 14.8%

(B) after 18 months 9% 14.8%

(d) incremental production

(i) new or expanded secondary recovery production

(A) pre-1985 wells 8.5% 16%

(B) post-1985 wells 8.5% 10.5%

(ii) new or expanded tertiary production

(A) pre-1985 wells 5.8% 15%

(B) post-1985 wells 5.8% 9.5%

(e) horizontally recompleted well

(i) first 18 months of production

(A) post-1985 wells 5.5% 5.5%

(B) post-1985 wells 5.5% 14.8%

(ii) after 18 months

(A) post-1985 wells 12.5% 12.5%

(B) post-1999 wells 9% 14.8%

~~(5)~~(6) (a) The reduced tax rates under subsections ~~(4)(a)(ii)(A)~~ (5)(a)(ii)(A) and ~~(4)(a)(ii)(B)~~ (5)(a)(ii)(B) for the first 24 months of oil production from a post-1985 well and subsection (5)(a)(iii)(A) for the first 12 months of oil production from a post-1999 well begin following the last day of the calendar month immediately preceding the month in which oil is pumped or flows, provided that notification has been given to the department.

(b) (i) The reduced tax rates under subsections ~~(4)(c)(i)~~ (5)(c)(i)(A) and ~~(4)(c)(ii)~~ (5)(c)(i)(B) on oil production from a horizontally completed well for the first 24 months of production from a post-1985 well and under subsection (5)(c)(ii)(A) on oil production from a horizontally completed well for the first 18 months of production from a post-1999 well begin following the last day of the calendar month immediately preceding the month in which oil is pumped or flows, provided that the well has been certified as a horizontally completed well to the department by the board.

(ii) The reduced tax ~~rate~~ rates under subsection ~~(4)(e)(i)~~ (5)(e)(i) on oil production from a horizontally recompleted well for the first 18 months of production from a post-1985 well or post-1999 well begins following the last day of the calendar month immediately preceding the month in which oil is pumped or flows, provided that the well has been certified as a horizontally recompleted well to the department by the board.

(c) Incremental production is taxed as provided in subsection ~~(4)(d)~~ (5)(d) if the average price ~~per~~ for a barrel of oil as reported in the Wall Street Journal for west Texas intermediate crude oil during a calendar quarter is less than $30 a barrel. If the price of oil is equal to or greater than $30 a barrel in a calendar quarter as determined in subsection ~~(5)(d)~~ (6)(d), then incremental production from pre-1985 wells, ~~and~~ from post-1985 wells, and from post-1999 wells is taxed at the rate imposed on primary recovery production under subsections ~~(4)(a)(i) and (4)(a)(ii)(C)~~ (5)(a)(i), (5)(a)(ii)(C), and (5)(a)(iii)(B), respectively, for production occurring in that quarter.

(d) For the purposes of subsection ~~(5)(c)~~ (6)(c), the average price per barrel must be computed by dividing the sum of the daily price for west Texas intermediate crude oil as reported in the Wall Street Journal for the calendar quarter by the number of days on which the price was reported in the quarter.

~~(6)~~(7) The tax rates imposed under subsections (2) and ~~(4)~~ (5) on working interest owners and nonworking interest owners must be adjusted to include the privilege and license tax adopted by the board of oil and gas conservation pursuant to 82-11-131."

Section 4. Section 15-36-304, MCA, is amended to read:

"15-36-304. Production tax rates imposed on oil and natural gas. (1) The production of oil and natural gas is taxed as provided in this section. The tax is distributed as provided in 15-36-324.

Working Nonworking

Interest Interest

~~(a) pre-1985 wells~~ ~~18.55% 14.8%~~

~~(b) post-1985 wells~~

(a) (i) first 12 months of qualifying

production 0.5% 14.8%

~~(ii) next 12 months of qualifying~~

~~production 12.5% 14.8%~~

~~(iii)~~(ii) after 24 12 months ~~15.15% 14.8%~~

(A) pre-1999 wells 14.8% 14.8%

(B) post-1999 wells 9% 14.8%

~~(c)~~(b) stripper natural gas ~~pre-1985~~

~~and post-1985~~ pre-1999 wells 11% 14.8%

(i) first 18 months of qualifying

production 0.5% 14.8%

(ii) after 18 months 9% 14.8%

(3) The reduced tax rates under ~~subsections (2)(b)(i) and (2)(b)(ii)~~ subsection (2)(a)(i) on production for the first 24 12 months of natural gas production from a ~~post-1985~~ well ~~begin~~ begins following the last day of the calendar month immediately preceding the month in which natural gas is placed in a natural gas distribution system, provided that notification has been given to the department.

(4) The reduced tax rate under subsection (2)(c)(i) on production from a horizontally completed well for the first 18 months of production begins following the last day of the calendar month immediately preceding the month in which natural gas is placed in a natural gas distribution system, provided that notification has been given to the department.

Working Nonworking

Interest Interest

(a) primary recovery production

~~(i) pre-1985 wells 13.9% 16.9%~~

~~(ii) post-1985 wells~~

~~(A)~~(i) first 12 months of qualifying

production 0.5% 14.8%

~~(B) next 12 months of qualifying~~

~~production 7.5% 14.8%~~

~~(C)~~(ii) after 24 12 months ~~12.5% 14.8%~~

(A) pre-1999 wells 12.5% 14.8%

(B) post-1999 wells 9% 14.8%

(b) stripper oil production 9% 14.8%

~~(i) pre-1985 wells 10.5% 16.9%~~

~~(ii) post-1985 wells 10.5% 14.8%~~

~~(iii)~~(c) stripper exemption production 5.5% 14.8%

~~(A) pre-1985 wells 5.5% 16.9%~~

~~(B) post-1985 wells 5.5% 14.8%~~

~~(c)~~(d) horizontally completed well production

(i) first 18 months of qualifying

production 0.5% ~~5.5%~~ 14.8%

(ii) ~~next 6 months of qualifying~~

~~production 7.5% 12.5%~~

~~(iii)~~ after 24 18 months ~~12.5% 12.5%~~

(A) pre-1999 wells 12.5% 14.8%

(B) post-1999 wells 9% 14.8%

~~(d)~~(e) incremental production

(i) new or expanded secondary

recovery production 8.5% 14.8%

~~(A) pre-1985 wells 8.5% 16%~~

~~(B) post-1985 wells 8.5% 10.5%~~

(ii) new or expanded tertiary

production 5.8% 14.8%

~~(A) pre-1985 wells 5.8% 15%~~

~~(B) post-1985 wells 5.8% 9.5%~~

~~(e)~~(f) horizontally recompleted well

(i) first 18 months 5.5% ~~5.5%~~ 14.8%

(ii) after 18 months ~~12.5% 12.5%~~

(A) pre-1999 wells 12.5% 14.8%

(B) post-1999 wells 9% 14.8%

~~(5)~~(6) (a) The reduced tax rates under ~~subsections (4)(a)(ii)(A) and (4)(a)(ii)(B)~~ subsection (5)(a)(i) for the first 24 12 months of oil production from a ~~post-1985~~ well ~~begin~~ begins following the last day of the calendar month immediately preceding the month in which oil is pumped or flows, provided that notification has been given to the department.

(b) (i) The reduced tax rates under ~~subsections (4)(c)(i) and (4)(c)(ii)~~ subsection (5)(d)(i) on oil production from a horizontally completed well for the first 24 18 months of production ~~begin~~ begins following the last day of the calendar month immediately preceding the month in which oil is pumped or flows, provided that the well has been certified as a horizontally completed well to the department by the board.

(ii) The reduced tax rate under subsection ~~(4)(e)(i)~~ (5)(f)(i) on oil production from a horizontally recompleted well for the first 18 months of production begins following the last day of the calendar month immediately preceding the month in which oil is pumped or flows, provided that the well has been certified as a horizontally recompleted well to the department by the board.

(c) Incremental production is taxed as provided in subsection ~~(4)(d)~~ (5)(e) if the average price per barrel of oil as reported in the Wall Street Journal for west Texas intermediate crude oil during a calendar quarter is less than $30 a barrel. If the price of oil is equal to or greater than $30 a barrel in a calendar quarter as determined in subsection ~~(5)(d)~~ (6)(d), then incremental production from ~~pre-1985~~ pre-1999 wells and from ~~post-1985~~ post-1999 wells is taxed at the rate imposed on primary recovery production under subsections ~~(4)(a)(i)~~ (5)(a)(ii)(A) and ~~(4)(a)(ii)(C)~~ (5)(a)(ii)(B), respectively, for production occurring in that quarter.

Section 5. Section 15-36-324, MCA, is amended to read:

"15-36-324. Distribution of taxes -- rules. (1) For each calendar quarter, the department of revenue shall determine the amount of tax, late payment interest, and penalty collected under this part. For purposes of distribution of the taxes to county and school taxing units, the department shall determine the amount of oil and natural gas production taxes paid on production from pre-1985 wells, post-1985 wells, post-1999 wells, and horizontally completed wells located in the taxing unit.

(2) Except as provided in subsections (3) through (5), oil production taxes must be distributed as follows:

(a) The amount equal to 39.3% of the oil production taxes, including late payment interest and penalty, collected under this part must be distributed as provided in subsection ~~(8)~~ (9).

(b) The remaining 60.7% of the oil production taxes, plus accumulated interest earned on the amount allocated under this subsection (2)(b), must be deposited in the state special revenue fund in the state treasury and transferred to the county and school taxing units for distribution as provided in subsection ~~(11)~~ (12).

(3) (a) The amount equal to 100% of the oil production taxes, including late payment interest and penalty, collected from working interest owners on production from post-1985 wells and from post-1999 wells occurring during the first 12 months of production must be distributed as provided in subsection ~~(9)~~ (10).

(b) (i) The amount equal to 10.25% of the oil production taxes, including late payment interest and penalty, collected from working interest owners on qualifying production from post-1985 wells occurring during the next 12 months of production must be distributed as provided in subsection ~~(9)~~ (10).

(ii) The remaining 89.75% of the oil production taxes, plus accumulated interest earned on the amount allocated under this subsection (3)(b), must be deposited in the state special revenue fund in the state treasury and transferred to the county and school taxing units for distribution as provided in subsection ~~(11)~~ (12).

(4) (a) The amount equal to 100% of the oil production taxes, including late payment interest and penalty, collected under this part on production from working interest owners on horizontally completed wells occurring during the first 18 months of production must be distributed as provided in subsection ~~(9)~~ (10).

(b) (i) The amount equal to 10.25% of the oil production taxes, including late payment interest and penalty, collected from working interest owners on production from post-1985 horizontally completed wells occurring during the next 6 months of production must be distributed as provided in subsection ~~(9)~~ (10).

(ii) The remaining 89.75% of the oil production taxes, plus accumulated interest earned on the amount allocated under this subsection (4)(b), must be deposited in the state special revenue fund in the state treasury and transferred to the county and school taxing units for distribution as provided in subsection ~~(11)~~ (12).

(c) The amount equal to 100% of the oil production taxes, including late payment interest and penalty, collected under this part from working interest owners on the incremental production from horizontally recompleted wells occurring during the first 18 months of production must be distributed as provided in subsection ~~(8)~~ (9).

(5) (a) The amount equal to 13.8% of the oil production taxes, including late payment interest and penalty, collected from working interest owners on stripper exemption production from pre-1985 wells, ~~and~~ post-1985 wells, and post-1999 wells must be distributed as provided in subsection ~~(9)~~ (10).

(b) The remaining 86.2% of the oil production taxes, plus accumulated interest earned on the amount allocated under this subsection (5)(b), must be deposited in the state special revenue fund in the state treasury and transferred to the county and school taxing units for distribution as provided in subsection ~~(11)~~ (12).

(6) Except as provided in ~~subsection~~ subsections (7) and (8), natural gas production taxes must be allocated as follows:

(a) The amount equal to 14% of the natural gas production taxes, including late payment interest and penalty, collected under this part must be distributed as provided in subsection ~~(10)~~ (11).

(b) The remaining 86% of the natural gas production taxes, plus accumulated interest earned on the amount allocated under this subsection (6)(b), must be deposited in the state special revenue fund in the state treasury and transferred to the county and school taxing units for distribution as provided in subsection ~~(11)~~ (12).

(7) (a) The amount equal to 100% of the natural gas production taxes, including late payment interest and penalty, collected from working interest owners under this part on production from post-1985 wells and post-1999 wells occurring during the first 12 months of production must be distributed as provided in subsection ~~(9)~~ (10).

(b) (i) The amount equal to 6.25% of the natural gas production taxes, including late payment interest and penalty, collected from working interest owners on production from post-1985 wells occurring during the next 12 months of production must be distributed as provided in subsection ~~(9)~~ (10).

(ii) The remaining 93.75% of the oil production taxes, plus accumulated interest earned on the amount allocated under this subsection (7)(b), must be deposited in the state special revenue fund in the state treasury and transferred to the county and school taxing units for distribution as provided in subsection ~~(11)~~ (12).

(8) The amount equal to 100% of natural gas production taxes, including late payment interest and penalty, collected from working interest owners on production from horizontally completed wells occurring during the first 18 months of production must be distributed as provided in subsection (10).

~~(8)~~(9) The department shall, in accordance with the provisions of 15-1-501, distribute the state portion of oil production taxes specified in subsections (2)(a) and (4)(c), including late payment interest and penalty collected, as follows:

(a) 86.21% to the state general fund;

(b) 5.17% to the state special revenue fund for the purpose of paying expenses of the board as provided in 82-11-135; and

~~(9)~~(10) The department shall distribute the state portion of oil and natural gas production taxes specified in subsections (3)(a), (3)(b)(i), (4)(a), (4)(b)(i), (5)(a), (7)(a), ~~and~~ (7)(b)(i), and (8), including late payment interest and penalty collected, as follows:

(a) 37.5% to the state special revenue fund for the purpose of paying expenses of the board as provided in 82-11-135; and

(b) 62.5% to be distributed as provided by 15-38-106(2).

~~(10)~~(11) The department shall, in accordance with the provisions of 15-1-501, distribute the state portion of natural gas production taxes specified in subsection (6)(a), including late payment interest and penalty collected, as follows:

(a) 76.8% to the state general fund;

(b) 8.7% to the state special revenue fund for the purpose of paying expenses of the board as provided in 82-11-135; and

~~(11)~~(12) (a) For the purpose of distribution of the oil and natural gas production taxes from pre-1985 wells, the department shall each calendar quarter adjust the unit value determined under 15-36-323 according to the ratio that the oil and natural gas production taxes from pre-1985 wells collected during the calendar quarter for which the distribution occurs plus penalties and interest on delinquent oil and natural gas production taxes from pre-1985 wells bears to the total liability for the oil and natural gas production taxes from pre-1985 wells for the quarter for which the distribution occurs. The amount of oil and natural gas production taxes distributions must be calculated and distributed as follows:

(i) By the dates referred to in subsection ~~(12)~~ (13), the department shall calculate and distribute to each eligible county the amount of oil and natural gas production taxes from pre-1985 wells for the quarter, determined by multiplying the unit value, as adjusted in this subsection ~~(11)(a)~~ (12)(a), by the units of production on which oil and natural gas production taxes from pre-1985 wells were owed for the calendar quarter for which the distribution occurs.

(ii) Any amount by which the total tax liability exceeds or is less than the total distributions determined in this subsection ~~(11)(a)~~ (12)(a) must be calculated and distributed in the following manner:

(A) The excess amount or shortage must be divided by the total distribution determined for that period to obtain an excess or shortage percentage.

(B) The excess percentage must be multiplied by the distribution to each taxing unit, and this amount must be added to the distribution to each respective taxing unit.

(C) The shortage percentage must be multiplied by the distribution to each taxing unit, and this amount must be subtracted from the distribution to each respective taxing unit.

(b) Except as provided in subsection ~~(11)(c)~~ (12)(c), the county treasurer shall distribute the money received under subsection ~~(12)~~ (13) from pre-1985 wells to the taxing units that levied mills in fiscal year 1990 against calendar year 1988 production in the same manner that all other property tax proceeds were distributed during fiscal year 1990 in the taxing unit, except that a distribution may not be made to a municipal taxing unit.

(c) The board of county commissioners of a county may direct the county treasurer to reallocate the distribution of oil and natural gas production tax money that would have gone to a taxing unit, as provided in subsection ~~(11)(b)~~ (12)(b), to another taxing unit or taxing units, other than an elementary school or high school, within the county under the following conditions:

(i) The county treasurer shall first allocate the oil and natural gas production taxes to the taxing units within the county in the same proportion that all other property tax proceeds were distributed in the county in fiscal year 1990.

(ii) If the allocation in subsection ~~(11)(c)(i)~~ (12)(c)(i) exceeds the total budget for a taxing unit, the commissioners may direct the county treasurer to allocate the excess to any taxing unit within the county.

(d) The board of trustees of an elementary or high school district may reallocate the oil and natural gas production taxes distributed to the district by the county treasurer under the following conditions:

(i) The district shall first allocate the oil and natural gas production taxes to the budgeted funds of the district in the same proportion that all other property tax proceeds were distributed in the district in fiscal year 1990.

(ii) If the allocation under subsection ~~(11)(d)(i)~~ (12)(d)(i) exceeds the total budget for a fund, the trustees may allocate the excess to any budgeted fund of the school district.

(e) For all production from post-1985 wells, post-1999 wells, and horizontally drilled wells completed after December 31, 1993, the county treasurer shall distribute oil and natural gas production taxes received under subsections (2)(b), (3)(b)(ii), (4)(b)(ii), (5)(b), (6)(b), and (7)(b)(ii) between county and school taxing units in the relative proportions required by the levies for state, county, and school district purposes in the same manner as property taxes were distributed in the preceding fiscal year.

(f) The allocation to the county in subsection ~~(11)(e)~~ (12)(e) must be distributed by the county treasurer in the relative proportions required by the levies for county taxing units and in the same manner as property taxes were distributed in the preceding fiscal year.

(g) The money distributed in subsection ~~(11)(e)~~ (12)(e) that is required for the county mill levies for school district retirement obligations and transportation schedules must be deposited to the funds established for these purposes.

(h) The oil and natural gas production taxes distributed under subsection ~~(11)(b)~~ (12)(b) that are required for the 6-mill university levy imposed under 20-25-423 and for the county equalization levies imposed under 20-9-331 and 20-9-333, as those sections read on July 1, 1989, must be remitted by the county treasurer to the state treasurer.

(i) The oil and natural gas production taxes distributed under subsection ~~(11)(e)~~ (12)(e) that are required for the 6-mill university levy imposed under 20-25-423, for the county equalization levies imposed under 20-9-331 and 20-9-333, and for the state equalization aid levy imposed under 20-9-360 must be remitted by the county treasurer to the state treasurer.

(j) The amount of oil and natural gas production taxes remaining after the treasurer has remitted the amounts determined in subsections ~~(11)(h)~~ (12)(h) and ~~(11)(i)~~ (12)(i) is for the exclusive use and benefit of the county and school taxing units.

~~(12)~~(13) The department shall remit the amounts to be distributed in subsection ~~(11)~~ (12) to the county treasurer by the following dates:

(a) On or before August 1 of each year, the department shall remit to the county treasurer oil and natural gas production tax payments received for the calendar quarter ending March 31 of the current year.

(b) On or before November 1 of each year, the department shall remit to the county treasurer oil and natural gas production tax payments received for the calendar quarter ending June 30 of the current year.

(c) On or before February 1 of each year, the department shall remit to the county treasurer oil and natural gas production tax payments received for the calendar quarter ending September 30 of the previous year.

(d) On or before May 1 of each year, the department shall remit to the county treasurer oil and natural gas production tax payments received for the calendar quarter ending December 31 of the previous calendar year.

~~(13)~~(14) The department shall provide to each county by May 31 of each year the amount of gross taxable value represented by all types of production taxed under 15-36-304 for the previous calendar year multiplied by 60%. The resulting value must be treated as taxable value for county classification purposes and for county bonding purposes.

~~(14)~~(15) (a) In the event that the board of oil and gas conservation revises the privilege and license tax pursuant to 82-11-131, the department shall, by rule, change the formula under this section for distribution of taxes collected under 15-36-304. The revised formula must provide for the distribution of taxes in an amount equal to the rate adopted by the board of oil and gas conservation for the expenses of the board.

(b) Before the department adopts a rule pursuant to subsection ~~(14)(a)~~ (15)(a), it shall present the proposed rule to the revenue oversight committee.

~~(15)~~(16) The distribution to taxing units under this section is statutorily appropriated as provided in 17-7-502."

Section 6. Section 15-36-324, MCA, is amended to read:

"15-36-324. Distribution of taxes -- rules. (1) For each calendar quarter, the department ~~of revenue~~ shall determine the amount of tax, late payment interest, and penalty collected under this part. For purposes of distribution of the taxes to county and school taxing units, the department shall determine the amount of oil and natural gas production taxes paid on production ~~from pre-1985 wells, post-1985 wells, and horizontally completed wells located~~ in the taxing unit.

(2) Except as provided in subsections (3) through (5), oil production taxes must be distributed as follows:

(a) The amount equal to 39.3% of the oil production taxes, including late payment interest and penalty, collected under this part must be distributed as provided in subsection ~~(8)~~ (9).

(3) ~~(a)~~ The amount equal to 100% of the oil production taxes, including late payment interest and penalty, collected from working interest owners on qualifying production ~~from post-1985 wells~~ occurring during the first 12 months of production must be distributed as provided in subsection ~~(9)~~ (10).

(b) (i) The amount equal to 10.25% of the oil production taxes, including late payment interest and penalty, collected from working interest owners on production from post-1985 wells occurring during the next 12 months of production must be distributed as provided in subsection (9).

(4) (a) The amount equal to 100% of the oil production taxes, including late payment interest and penalty, collected ~~under this part~~ from working interest owners on production from horizontally completed wells occurring during the first 18 months of production must be distributed as provided in subsection ~~(9)~~ (10).

(b) (i) The amount equal to 10.25% of the oil production taxes, including late payment interest and penalty, collected from working interest owners on production from horizontally completed wells occurring during the next 6 months of production must be distributed as provided in subsection (9).

~~(c)~~(b) The amount equal to 100% of the oil production taxes, including late payment interest and penalty, collected ~~under this part~~ from working interest owners on the incremental production from horizontally recompleted wells occurring during the first 18 months of production must be distributed as provided in subsection ~~(8)~~ (9).

(5) (a) The amount equal to 13.8% of the oil production taxes, including late payment interest and penalty, collected from working interest owners on stripper exemption production ~~from pre-1985 wells and post-1985~~ wells must be distributed as provided in subsection ~~(9)~~ (10).

(6) Except as provided in ~~subsection~~ subsections (7) and (8), natural gas production taxes must be allocated as follows:

(a) The amount equal to 14% of the natural gas production taxes, including late payment interest and penalty, collected under this part must be distributed as provided in subsection ~~(10)~~ (11).

(7) ~~(a)~~ The amount equal to 100% of the natural gas production taxes, including late payment interest and penalty, collected from working interest owners under this part on production from ~~post-1985~~ wells occurring during the first 12 months of production must be distributed as provided in subsection ~~(9)~~ (10).

(9) The department shall, in accordance with the provisions of 15-1-501, distribute the state portion of oil production taxes specified in subsections (2)(a) and ~~(4)(c)~~ (4)(b), including late payment interest and penalty collected, as follows:

(a) 86.21% to the state general fund;

(b) 5.17% to the state special revenue fund for the purpose of paying expenses of the board as provided in 82-11-135; and

~~(9)~~(10) The department shall distribute the state portion of oil and natural gas production taxes specified in subsections (3)~~(a)~~, ~~(3)(b)(i),~~ (4)(a), ~~(4)(b)(i),~~ (5)(a), (7)~~(a)~~, and ~~(7)(b)(i)~~ (8), including late payment interest and penalty collected, as follows:

(a) 37.5% to the state special revenue fund for the purpose of paying expenses of the board as provided in 82-11-135; and

(b) 62.5% to be distributed as provided by 15-38-106(2).

(a) 76.8% to the state general fund;

(b) 8.7% to the state special revenue fund for the purpose of paying expenses of the board as provided in 82-11-135; and

~~(i)~~ By the dates referred to in subsection ~~(12)~~ (13), the department shall, except as provided in subsection (12)(b), calculate and distribute oil and natural gas production taxes received under subsections (2)(b), (5)(b), and (6)(b) to each eligible county ~~the amount of~~ in proportion to the oil and natural gas production taxes from pre-1985 wells for the quarter, determined by multiplying the unit value, as adjusted in this subsection (11)(a), by the units of production on which oil and natural gas production taxes from pre-1985 wells were owed for the calendar quarter for which the distribution occurs received under subsections (2)(b), (5)(b), and (6)(b) that are attributable to production in that county.

(b) The department shall distribute 5% of the oil and natural gas production taxes received under subsections (2)(b), (5)(b), and (6)(b) from pre-1999 wells to eligible counties in proportion to the underfunding that would have occurred from the tax liability distribution of pre-1985 oil and natural gas production taxes for production in calendar year 1997.

~~(ii) Any amount by which the total tax liability exceeds or is less than the total distributions determined in this subsection (11)(a) must be calculated and distributed in the following manner:~~

~~(A) The excess amount or shortage must be divided by the total distribution determined for that period to obtain an excess or shortage percentage.~~

~~(B) The excess percentage must be multiplied by the distribution to each taxing unit, and this amount must be added to the distribution to each respective taxing unit.~~

~~(C) The shortage percentage must be multiplied by the distribution to each taxing unit, and this amount must be subtracted from the distribution to each respective taxing unit.~~

~~(b)~~(c) Except as provided in subsection ~~(11)(c)~~ (12)(d), the county treasurer shall distribute the money received under subsection (12)(b) ~~from pre-1985 wells~~ to the taxing units that levied mills in fiscal year 1990 against calendar year 1988 production in the same manner that all other property tax proceeds were distributed during fiscal year 1990 in the taxing unit, except that a distribution may not be made to a municipal taxing unit.

~~(c)~~(d) The board of county commissioners of a county may direct the county treasurer to reallocate the distribution of oil and natural gas production tax money that would have gone to a taxing unit, as provided in subsection ~~(11)(b)~~ (12)(c), to another taxing unit or taxing units, other than an elementary school or high school, within the county under the following conditions:

(ii) If the allocation in subsection ~~(11)(c)(i)~~ (12)(d)(i) exceeds the total budget for a taxing unit, the commissioners may direct the county treasurer to allocate the excess to any taxing unit within the county.

~~(d)~~(e) The board of trustees of an elementary or high school district may reallocate the oil and natural gas production taxes distributed to the district by the county treasurer under the following conditions:

(ii) If the allocation under subsection ~~(11)(d)(i)~~ (12)(e)(i) exceeds the total budget for a fund, the trustees may allocate the excess to any budgeted fund of the school district.

~~(e)~~(f) ~~For all production from post-1985 wells and horizontally drilled wells completed after December 31, 1993, the~~ The county treasurer shall distribute oil and natural gas production taxes received under ~~subsections (2)(b), (3)(b)(ii), (4)(b)(ii), (5)(b), (6)(b), and (7)(b)(ii)~~ subsection (12)(a) between county and school taxing units in the relative proportions required by the levies for state, county, and school district purposes in the same manner as property taxes were distributed in the preceding fiscal year.

~~(f)~~(g) The allocation to the county in subsection ~~(11)(e)~~ (12)(f) must be distributed by the county treasurer in the relative proportions required by the levies for county taxing units and in the same manner as property taxes were distributed in the preceding fiscal year.

~~(g)~~(h) The money distributed in subsection ~~(11)(e)~~ (12)(f) that is required for the county mill levies for school district retirement obligations and transportation schedules must be deposited to the funds established for these purposes.

~~(h)~~(i) The oil and natural gas production taxes distributed under subsection ~~(11)(b)~~ (12)(c) that are required for the 6-mill university levy imposed under 20-25-423 and for the county equalization levies imposed under 20-9-331 and 20-9-333, as those sections read on July 1, 1989, must be remitted by the county treasurer to the state treasurer.

~~(i)~~(j) The oil and natural gas production taxes distributed under subsection ~~(11)(e)~~ (12)(f) that are required for the 6-mill university levy imposed under 20-25-423, for the county equalization levies imposed under 20-9-331 and 20-9-333, and for the state equalization aid levy imposed under 20-9-360 must be remitted by the county treasurer to the state treasurer.

~~(j)~~(k) The amount of oil and natural gas production taxes remaining after the treasurer has remitted the amounts determined in subsections ~~(11)(h)~~ (12)(i) and ~~(11)(i)~~ (12)(j) is for the exclusive use and benefit of the county and school taxing units.

~~(12)~~(13) The department shall remit the amounts to be distributed in subsection ~~(11)~~ (12) to the county treasurer by the following dates:

(b) Before the department adopts a rule pursuant to subsection ~~(14)(a)~~ (15)(a), it shall present the proposed rule to the revenue oversight committee.

~~(15)~~(16) The distribution to taxing units under this section is statutorily appropriated as provided in 17-7-502."

Section 7. Section 15-36-326, MCA, is amended to read:

"15-36-326. Oil and natural gas accelerated tax fund. (1) The county commissioners of a county that receives tax distributions under 15-36-325, as that section read on December 31, 1999, shall establish an oil and natural gas accelerated tax fund for the deposit of the distributions. The county commissioners may retain the money in the fund for any time period considered appropriate by the commissioners. Money retained in the fund may not be considered as fund balance for the purpose of reducing mill levies.

(2) Money may be expended from the fund for any purpose allowed by law.

(3) Money in the fund must be invested as provided by law. Interest and income earned on the investment of money in the fund must be credited to the fund.

(4) The oil and natural gas accelerated tax fund must be financially administered as a nonbudgeted fund under the provisions of Title 7, chapter 6, part 23."

Section 8. Section 17-7-502, MCA, is amended to read:

"17-7-502. (Temporary) Statutory appropriations -- definition -- requisites for validity. (1) A statutory appropriation is an appropriation made by permanent law that authorizes spending by a state agency without the need for a biennial legislative appropriation or budget amendment.

(2) Except as provided in subsection (4), to be effective, a statutory appropriation must comply with both of the following provisions:

(a) The law containing the statutory authority must be listed in subsection (3).

(b) The law or portion of the law making a statutory appropriation must specifically state that a statutory appropriation is made as provided in this section.

(3) The following laws are the only laws containing statutory appropriations: 2-17-105; 3-5-901; 5-13-403; 10-3-203; 10-3-310; 10-3-312; 10-3-314; 10-4-301; 15-1-111; 15-23-706; 15-30-195; 15-31-702; 15-36-324; ~~15-36-325;~~ 15-37-117; 15-38-202; 15-65-121; 15-70-101; 16-1-404; 16-1-406; 16-1-411; 16-11-308; 17-3-106; 17-3-212; 17-3-222; 17-6-101; 17-7-304; 18-11-112; 19-3-319; 19-6-709; 19-9-702; 19-13-604; 19-17-301; 19-18-512; 19-19-305; 19-19-506; 20-8-107; 20-8-111; 20-26-1503; 22-3-1004; 23-5-136; 23-5-306; 23-5-409; 23-5-610; 23-5-612; 23-5-631; 23-7-301; 23-7-402; 37-43-204; 37-51-501; 39-71-503; 39-71-907; 39-71-2321; 42-2-105; 44-12-206; 44-13-102; 50-4-623; 53-6-703; 53-24-206; 67-3-205; 75-1-1101; 75-5-1108; 75-6-214; 75-11-313; 77-1-131; 80-2-103; 80-2-222; 80-4-416; 81-5-111; 82-11-161; 85-20-402; 87-1-513; 90-3-301; 90-4-215; 90-6-331; and 90-9-306.

(4) There is a statutory appropriation to pay the principal, interest, premiums, and costs of issuing, paying, and securing all bonds, notes, or other obligations, as due, that have been authorized and issued pursuant to the laws of Montana. Agencies that have entered into agreements authorized by the laws of Montana to pay the state treasurer, for deposit in accordance with 17-2-101 through 17-2-107, as determined by the state treasurer, an amount sufficient to pay the principal and interest as due on the bonds or notes have statutory appropriation authority for the payments. (In subsection (3): pursuant to sec. 7, Ch. 567, L. 1991, the inclusion of 19-6-709 terminates upon death of last recipient eligible for supplemental benefit; pursuant to sec. 7(2), Ch. 29, L. 1995, the inclusion of 15-30-195 terminates July 1, 2001; pursuant to sec. 5, Ch. 461, L. 1997, the inclusion of 77-1-131 terminates October 1, 2003; and pursuant to secs. 13, 16(1), Ch. 549, L. 1997, the inclusion of 90-3-301 terminates July 1, 1999.)

17-7-502. (Effective July 1, 2008) Statutory appropriations -- definition -- requisites for validity. (1) A statutory appropriation is an appropriation made by permanent law that authorizes spending by a state agency without the need for a biennial legislative appropriation or budget amendment.

(2) Except as provided in subsection (4), to be effective, a statutory appropriation must comply with both of the following provisions:

(a) The law containing the statutory authority must be listed in subsection (3).

(b) The law or portion of the law making a statutory appropriation must specifically state that a statutory appropriation is made as provided in this section.

(3) The following laws are the only laws containing statutory appropriations: 2-17-105; 3-5-901; 5-13-403; 10-3-203; 10-3-310; 10-3-312; 10-3-314; 10-4-301; 15-23-706; 15-30-195; 15-31-702; 15-36-324; ~~15-36-325;~~ 15-37-117; 15-38-202; 15-65-121; 15-70-101; 16-1-404; [16-1-406;] 16-1-411; 16-11-308; 17-3-106; 17-3-212; 17-3-222; 17-5-404; 17-5-804; 17-6-101; 17-7-304; 18-11-112; 19-3-319; 19-6-709; 19-9-702; 19-13-604; 19-17-301; 19-18-512; 19-19-205; 19-19-305; 19-19-506; 20-8-107; 20-9-361; 20-26-1503; 22-3-1004; 23-5-136; 23-5-306; 23-5-409; 23-5-610; 23-5-612; 23-5-631; 23-7-301; 23-7-402; 32-1-537; 37-43-204; 37-51-501; 39-71-503; 39-71-907; 39-71-2321; 42-2-105; 44-12-206; 44-13-102; 50-4-623; 50-5-232; 50-40-206; 53-6-150; 53-6-703; 53-24-206; 60-2-220; 67-3-205; 75-1-1101; 75-5-1108; 75-6-214; 75-5-1108; 75-6-214; 75-11-313; 77-1-505; 80-2-103; 80-2-222; 80-4-416; 81-5-111; 82-11-136; 82-11-161; 85-1-220; 85-20-402; 87-1-513; 90-4-215; 90-6-331; 90-7-220; 90-7-221; and 90-9-306.

(4) There is a statutory appropriation to pay the principal, interest, premiums, and costs of issuing, paying, and securing all bonds, notes, or other obligations, as due, that have been authorized and issued pursuant to the laws of Montana. Agencies that have entered into agreements authorized by the laws of Montana to pay the state treasurer, for deposit in accordance with 17-2-101 through 17-2-107, as determined by the state treasurer, an amount sufficient to pay the principal and interest as due on the bonds or notes have statutory appropriation authority for the payments. (In subsection (3): pursuant to sec. 7, Ch. 567, L. 1991, the inclusion of 19-6-709 terminates upon death of last recipient eligible for supplemental benefit; and pursuant to sec. 68(2), Ch. 422, L. 1997, this version becomes effective July 1, 2008.)"

Section 9. Section 20-9-104, MCA, is amended to read:

"20-9-104. General fund operating reserve. (1) At the end of each school fiscal year, the trustees of each district shall designate the portion of the general fund end-of-the-year fund balance that is to be earmarked as operating reserve for the purpose of paying general fund warrants issued by the district from July 1 to November 30 of the ensuing school fiscal year. Except as provided in subsections (5) and (6), the amount of the general fund balance that is earmarked as operating reserve may not exceed 10% of the final general fund budget for the ensuing school fiscal year.

(2) The amount held as operating reserve may not be used for property tax reduction in the manner permitted by 20-9-141(1)(b) for other receipts.

(3) Excess reserves as provided in subsection (5) may be appropriated to reduce the BASE budget levy, the over-BASE budget levy, or the additional levy provided by 20-9-353.

(4) Any portion of the general fund end-of-the-year fund balance that is not reserved under subsection (2) or reappropriated under subsection (3) is fund balance reappropriated and must be used for property tax reduction as provided in 20-9-141(1)(b).

(5) The limitation of subsection (1) does not apply when the amount in excess of the limitation is equal to or less than the unused balance of any amount:

(a) (i) received in settlement of tax payments protested in a prior school fiscal year;

(ii) received in taxes from a prior school fiscal year as a result of a tax audit by the department of revenue or its agents;

(iii) received in delinquent taxes from a prior school fiscal year; ~~and~~ or

~~(iv) received as a local government severance tax payment for calendar year 1995 production as provided in 15-36-325; or~~

(b) a district was entitled to as a general bonus payment prior to July 1, 1994.

(6) The limitation of subsection (1) does not apply when the amount earmarked as operating reserve is $10,000 or less."

Section 10. Section 20-9-161, MCA, is amended to read:

"20-9-161. Definition of budget amendment for budgeting purposes. As used in this title, unless the context clearly indicates otherwise, the term "budget amendment" for the purpose of school budgeting means an amendment to an adopted budget of the district for the following reasons:

(1) an increase in the enrollment of an elementary or high school district that is beyond what could reasonably have been anticipated at the time of the adoption of the budget for the current school fiscal year whenever, because of the enrollment increase, the district's budget for any or all of the regularly budgeted funds does not provide sufficient financing to properly maintain and support the district for the entire current school fiscal year;

(2) the destruction or impairment of any school property necessary to the maintenance of the school, by fire, flood, storm, riot, insurrection, or act of God, to an extent rendering school property unfit for its present school use;

(3) a judgment for damages against the district issued by a court after the adoption of the budget for the current year;

(4) an enactment of legislation after the adoption of the budget for the current year that imposes an additional financial obligation on the district;

(5) the receipt of:

(a) a settlement of taxes protested in a prior school fiscal year;

(b) taxes from a prior school fiscal year as the result of a tax audit by the department of revenue or its agents;

~~(d) local government severance tax payments for calendar year 1995 production as provided in 15-36-325(7);~~ and

~~(e)~~(d) a determination by the trustees that it is necessary to expend all or a portion of the taxes received under subsection (5)(a), (5)(b), or (5)(c)~~, or (5)(d)~~ for a project or projects that were deferred from a previous budget of the district; or

(6) any other unforeseen need of the district that cannot be postponed until the next school year without dire consequences affecting the safety of the students and district employees or the educational functions of the district."

Section 11. Section 20-9-331, MCA, is amended to read:

"20-9-331. Basic county tax for elementary equalization and other revenue for county equalization of elementary BASE funding program. (1) The county commissioners of each county shall levy an annual basic county tax of 33 mills on the dollar of the taxable value of all taxable property within the county, except for property subject to a tax or fee under 23-2-517, 23-2-803, 61-3-504, 61-3-521, 61-3-527, 61-3-529, 61-3-537, and 67-3-204, for the purposes of elementary equalization and state BASE funding program support. The revenue collected from this levy must be apportioned to the support of the elementary BASE funding programs of the school districts in the county and to the state general fund in the following manner:

(a) In order to determine the amount of revenue raised by this levy that is retained by the county, the sum of the estimated revenue identified in subsection (2) must be subtracted from the total of the BASE funding programs of all elementary districts of the county.

(b) If the basic levy and other revenue prescribed by this section produce more revenue than is required to repay a state advance for county equalization, the county treasurer shall remit the surplus funds to the state treasurer for deposit to the state general fund immediately upon occurrence of a surplus balance and each subsequent month, with any final remittance due no later than June 20 of the fiscal year for which the levy has been set.

(2) The revenue realized from the county's portion of the levy prescribed by this section and the revenue from the following sources must be used for the equalization of the elementary BASE funding program of the county as prescribed in 20-9-335, and a separate accounting must be kept of the revenue by the county treasurer in accordance with 20-9-212(1):

(a) the portion of the federal Taylor Grazing Act funds distributed to a county and designated for the elementary county equalization fund under the provisions of 17-3-222;

(b) the portion of the federal flood control act funds distributed to a county and designated for expenditure for the benefit of the county common schools under the provisions of 17-3-232;

(c) all money paid into the county treasury as a result of fines for violations of law, except money paid to a justice's court, and the use of which is not otherwise specified by law;

(d) any money remaining at the end of the immediately preceding school fiscal year in the county treasurer's accounts for the various sources of revenue established or referred to in this section;

(e) any federal or state money distributed to the county as payment in lieu of property taxation, including federal forest reserve funds allocated under the provisions of 17-3-213;

(f) gross proceeds taxes from coal under 15-23-703;

(g) oil and natural gas production taxes;

~~(h) anticipated local government severance tax payments for calendar year 1995 production as provided in 15-36-325;~~ and

~~(i)~~(h) anticipated revenue from property taxes and fees imposed under 23-2-517, 23-2-803, 61-3-504, 61-3-521, 61-3-527, 61-3-529, 61-3-537, and 67-3-204."

Section 12. Section 20-9-333, MCA, is amended to read:

"20-9-333. Basic county tax for high school equalization and other revenue for county equalization of high school BASE funding program. (1) The county commissioners of each county shall levy an annual basic county tax of 22 mills on the dollar of the taxable value of all taxable property within the county, except for property subject to a tax or fee under 23-2-517, 23-2-803, 61-3-504, 61-3-521, 61-3-527, 61-3-529, 61-3-537, and 67-3-204, for the purposes of high school equalization and state BASE funding program support. The revenue collected from this levy must be apportioned to the support of the BASE funding programs of high school districts in the county and to the state general fund in the following manner:

(a) In order to determine the amount of revenue raised by this levy that is retained by the county, the sum of the estimated revenue identified in subsection (2) must be subtracted from the sum of the county's high school tuition obligation and the total of the BASE funding programs of all high school districts of the county.

(2) The revenue realized from the county's portion of the levy prescribed in this section and the revenue from the following sources must be used for the equalization of the high school BASE funding program of the county as prescribed in 20-9-335, and a separate accounting must be kept of the revenue by the county treasurer in accordance with 20-9-212(1):

(a) any money remaining at the end of the immediately preceding school fiscal year in the county treasurer's accounts for the various sources of revenue established in this section;

(b) any federal or state money distributed to the county as payment in lieu of property taxation, including federal forest reserve funds allocated under the provisions of 17-3-213;

(d) oil and natural gas production taxes;

~~(e) anticipated local government severance tax payments for calendar year 1995 production as provided in 15-36-325;~~ and

~~(f)~~(e) anticipated revenue from property taxes and fees imposed under 23-2-517, 23-2-803, 61-3-504, 61-3-521, 61-3-527, 61-3-529, 61-3-537, and 67-3-204."

Section 13. Section 20-9-501, MCA, is amended to read:

"20-9-501. Retirement fund. (1) The trustees of a district employing personnel who are members of the teachers' retirement system or the public employees' retirement system or who are covered by unemployment insurance or who are covered by any federal social security system requiring employer contributions shall establish a retirement fund for the purposes of budgeting and paying the employer's contributions to the systems. The district's contribution for each employee who is a member of the teachers' retirement system must be calculated in accordance with Title 19, chapter 20, part 6. The district's contribution for each employee who is a member of the public employees' retirement system must be calculated in accordance with 19-3-316. The district's contributions for each employee covered by any federal social security system must be paid in accordance with federal law and regulation. The district's contribution for each employee who is covered by unemployment insurance must be paid in accordance with Title 39, chapter 51, part 11.

(2) The trustees of a district required to make a contribution to a system referred to in subsection (1) shall include in the retirement fund of the final budget the estimated amount of the employer's contribution. After the final retirement fund budget has been adopted, the trustees shall pay the employer contributions to the systems in accordance with the financial administration provisions of this title.

(3) When the final retirement fund budget has been adopted, the county superintendent shall establish the levy requirement by:

(a) determining the sum of the money available to reduce the retirement fund levy requirement by adding:

(i) any anticipated money that may be realized in the retirement fund during the ensuing school fiscal year, including anticipated revenue from property taxes and fees imposed under 23-2-517, 23-2-803, 61-3-504, 61-3-521, 61-3-527, 61-3-529, 61-3-537, and 67-3-204;

(ii) oil and natural gas production taxes;

~~(iii) anticipated local government severance tax payments for calendar year 1995 production as provided in 15-36-325;~~

~~(iv)~~(iii) coal gross proceeds taxes under 15-23-703;

~~(v)~~(iv) any fund balance available for reappropriation as determined by subtracting the amount of the end-of-the-year fund balance earmarked as the retirement fund operating reserve for the ensuing school fiscal year by the trustees from the end-of-the-year fund balance in the retirement fund. The retirement fund operating reserve may not be more than 35% of the final retirement fund budget for the ensuing school fiscal year and must be used for the purpose of paying retirement fund warrants issued by the district under the final retirement fund budget.

~~(vi)~~(v) any other revenue anticipated that may be realized in the retirement fund during the ensuing school fiscal year, excluding any guaranteed tax base aid.

(b) notwithstanding the provisions of subsection (8), subtracting the money available for reduction of the levy requirement, as determined in subsection (3)(a), from the budgeted amount for expenditures in the final retirement fund budget.

(4) The county superintendent shall:

(a) total the net retirement fund levy requirements separately for all elementary school districts, all high school districts, and all community college districts of the county, including any prorated joint district or special education cooperative agreement levy requirements; and

(b) report each levy requirement to the county commissioners on the fourth Monday of August as the respective county levy requirements for elementary district, high school district, and community college district retirement funds.

(5) The county commissioners shall fix and set the county levy in accordance with 20-9-142.

(6) The net retirement fund levy requirement for a joint elementary district or a joint high school district must be prorated to each county in which a part of the district is located in the same proportion as the district ANB of the joint district is distributed by pupil residence in each county. The county superintendents of the counties affected shall jointly determine the net retirement fund levy requirement for each county as provided in 20-9-151.

(7) The net retirement fund levy requirement for districts that are members of special education cooperative agreements must be prorated to each county in which the district is located in the same proportion as the special education cooperative budget is prorated to the member school districts. The county superintendents of the counties affected shall jointly determine the net retirement fund levy requirement for each county in the same manner as provided in 20-9-151, and the county commissioners shall fix and levy the net retirement fund levy for each county in the same manner as provided in 20-9-152.

(8) The county superintendent shall calculate the number of mills to be levied on the taxable property in the county to finance the retirement fund net levy requirement by dividing the amount determined in subsection (4)(a) by the sum of:

(a) the amount of guaranteed tax base aid that the county will receive for each mill levied, as certified by the superintendent of public instruction; and

(b) the taxable valuation of the district divided by 1,000."

Section 14. Section 20-9-507, MCA, is amended to read:

"20-9-507. Miscellaneous programs fund. (1) The trustees of a district receiving money from local, state, federal, or other sources provided in 20-5-324 other than money under the provisions of impact aid, as provided in 20 U.S.C. 7701, et seq., or federal money designated for deposit in a specific fund of the district shall establish a miscellaneous programs fund for the deposit of the money. The money may be a reimbursement of miscellaneous program fund expenditures already realized by the district, ~~a payment received as a local government severance tax payment for calendar year 1995 production as provided in 15-36-325,~~ indirect cost recoveries, or a grant of money for the financing of expenditures to be realized by the district for a special, approved program to be operated by the district. When the money is a reimbursement or a local government severance tax payment, the money may be expended at the discretion of the trustees for school purposes. When the money is a grant, the money must be expended according to the conditions of the program approval by the superintendent of public instruction or any other approval agent. Within the miscellaneous programs fund, the trustees shall maintain a separate accounting for each local, state, or federal grant project and the indirect cost recoveries.

(2) The financial administration of the miscellaneous programs fund must be in accordance with the financial administration provisions of this title for a nonbudgeted fund."

Section 15. Repealer. Sections 15-36-323 and 15-36-325, MCA, are repealed.

Section 16. Saving clause. [This act] does not affect rights and duties that matured, penalties that were incurred, or proceedings that were begun before [the effective date of this act].

Section 17. Coordination instruction. (1) If House Bill No. 658 is passed and approved and House Bill No. 661 is not passed and approved, then:

(a) the version of 15-36-304(5)(b) applicable between December 31, 1998, and December 31, 1999, must read as follows:

"(b) stripper oil production

(i) pre-1985 wells 10.5% 16.9%

(ii) post-1985 wells 10.5% 14.8%

(iii) stripper exemption production

(A) pre-1985 wells 5.5% 16.9%

(B) post-1985 wells 5.5% 14.8%

(iv) stripper well exemption production 0.5% 14.8%"

(b) the version of 15-36-304(5)(b) and (c) applicable after December 31, 1999, must read as follows:

"(b) stripper oil production 5.5% 14.8%

(2) If House Bill No. 661 is passed and approved and House Bill No. 658 is not passed and approved, then:

(a) the version of 15-36-304(5)(b) applicable between December 31, 1998, and December 31, 1999, must read as follows:

"(b) stripper oil production

(i) first 1 through 10 barrels a day production 5.5% 14.8%

(ii) more than 10 barrels a day production 9.0% 14.8%"

(b) the version of 15-36-304(5)(b) applicable after December 31, 1999, must read as follows:

"(b) stripper oil production

(i) first 1 through 10 barrels a day production 5.5% 14.8%

(ii) more than 10 barrels a day production 9.0% 14.8%"

(c) in the version of 15-36-304(5) applicable after December 31, 1999, subsection (c) relating to stripper exemption production must be deleted and subsequent subsections must be renumbered.

(3) If both House Bill No. 658 and House Bill No. 661 are passed and approved, then:

(a) the version of 15-36-304(5)(b) applicable between December 31, 1998, and December 31, 1999, must read as follows:

"(b) stripper oil production

(i) first 1 through 10 barrels a day production 5.5% 14.8%

(ii) more than 10 barrels a day production 9.0% 14.8%

(iii) stripper well exemption production 0.5% 14.8%"

(b) the version of 15-36-304(5)(b) and (c) applicable after December 31, 1999, must read as follows:

"(b) stripper oil production

(i) first 1 through 10 barrels a day production 5.5% 14.8%

(ii) more than 10 barrels a day production 9.0% 14.8%

Section 18. Effective dates. (1) [Sections 1, 3, 5, 16, 17, 19, 20 and this section] are effective on passage and approval.

(2) [Sections 2, 4, and 6 through 15] are effective January 1, 2000.

Section 19. Applicability. (1) Except as provided in subsections (2) and (3), [this act] applies to oil and natural gas produced and sold and to wells drilled after December 31, 1999.

(2) [Sections 1, 3, and 5] apply retroactively, within the meaning of 1-2-109, to oil and natural gas produced and sold and to wells drilled after December 31, 1998.

(3) [Section 17] applies to oil produced and sold after June 30, 1999.

Section 20. Termination. [Sections 1, 3, and 5] terminate December 31, 1999.

- END -

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