_________ Bill No. _______

Introduced By _______________________________________________________________________________

A Bill for an Act entitled: "An Act creating the building of a new century program; providing for the use of interest money from a portion of coal severance tax proceeds to stimulate economic prosperity in Montana through research and development, historic preservation, and land stewardship; establishing a new century trust fund within the coal severance tax trust; establishing a research and development special revenue account; establishing a research and development endowment fund in the coal severance tax trust fund; appropriating new century fund interest for research and development; creating a Montana heritage preservation and development commission; creating a Montana heritage preservation account; authorizing the issuance of revenue bonds to finance historic preservation projects; creating a Montana land stewardship commission; creating a Montana land stewardship account; increasing video gambling machine taxes to support the program; amending sections 17-5-703, 17-7-502, and 23-5-610, MCA; and providing an effective date."

STATEMENT OF INTENT

A statement of intent is required for this bill because it delegates rulemaking authority to various entities. The Montana heritage preservation and development commission is authorized to adopt rules establishing policies for the acquisition, maintenance, and management of properties. It is the intent of this bill to provide a means for the commission to acquire on behalf of the state properties that possess outstanding historical value, that display exceptional preservation qualities, that are genuinely representative of the state's history and culture, and that demonstrate an ability to become economically self-supporting. The rules must address policy considerations for making acquisitions as well as procedures for determining whether proposed properties are acquired. The rules must limit acquisitions to those that preserve the state's history and culture and that demonstrate the ability to be managed in a way that makes them economically independent from future state support.

The Montana land stewardship commission is also authorized to adopt rules establishing policies for stewardship acquisitions. It is the intent of this bill to provide a means for the commission to acquire, from willing sellers, a permanent interest in land, for the purpose of preserving rural landscapes, while providing for the continued working of family farms and ranches. The interests may typically be acquired, on behalf of the state, by the purchase of conservation easements. The purchase of fee title and subsequent resale with the reservation of a conservation easement is permitted. Rules must establish procedures for proposed acquisitions. The rules may provide for grants to nonprofit organizations entitled to acquire conservation easements that support the purposes of the program. The rules must give priority to acquisitions that preserve family farms and ranches involved in viable traditional agricultural activities, when those activities are threatened. The rules must provide for continuation of the property in an economically productive capacity, protection of landscapes, protection of corridors that have significant public value, and consideration of impacts on adjacent public or private land.

Be it enacted by the Legislature of the State of Montana:

Section 1. Section 17-5-703, MCA, is amended to read:

"17-5-703. Coal severance tax trust funds. (1) The trust established under Article IX, section 5, of the Montana constitution is composed of the following funds:

(a) a new century fund;

~~(a)~~(b) a coal severance tax bond fund into which the constitutionally dedicated receipts from the coal severance tax must be deposited;

~~(b)~~(c) a treasure state endowment fund;

~~(c)~~(d) a coal severance tax permanent fund;

~~(d)~~(e) a coal severance tax income fund; ~~and~~

~~(e)~~(f) a coal severance tax school bond contingency loan fund; and

(g) a research and development endowment fund.

(2) (a) The state treasurer shall determine, on July 1 of each year, the amount necessary to meet all principal and interest payments on bonds payable from the coal severance tax bond fund during the next 12 months and retain that amount in the coal severance tax bond fund.

(b) The amount in the coal severance tax bond fund in excess of the amount required in subsection (2)(a) must be transferred from that fund as provided in subsections (3) through (5).

(3) (a) ~~On January 21, 1992, and continuing as~~ As long as any school district bonds secured by state loans under 20-9-466 are outstanding, the state treasurer shall from time to time and as provided in subsection (3)(b) transfer from the coal severance tax bond fund to the coal severance tax school bond contingency loan fund any amount in the coal severance tax bond fund in excess of the amount that is specified in subsection (2) to be retained in the fund.

(b) The state treasurer shall transfer the amount referred to in subsection (3)(a) until and unless the balance in the coal severance tax school bond contingency loan fund is equal to the amount due as principal of and interest on the school district bonds secured by state loans under 20-9-466 during the next following 12 months.

(4) (a) ~~Beginning July 1, 1993, and ending~~ Ending June 30, 2013, the state treasurer shall quarterly transfer to the treasure state endowment fund 50% of the amount in the coal severance tax bond fund in excess of the amount that is specified in subsection (2) to be retained in the fund and in excess of amounts that are transferred pursuant to subsection (3).

(b) The state treasurer shall monthly transfer from the treasure state endowment fund to the treasure state endowment special revenue account the amount of earnings required to meet the obligations of the state that are payable from the account in accordance with 90-6-710. Earnings not transferred to the treasure state endowment special revenue account must be retained in the treasure state endowment fund.

(5) ~~Any~~ After the allocation in subsection (6), the amount in the coal severance tax bond fund in excess of the amount that is specified in subsection (2)(a) to be retained in the fund and that is not otherwise allocated under this section must be deposited in the coal severance tax permanent fund.

(6) (a) Annually between July 1, 1997, and June 30, 2007, the first $10 million that would be deposited in the coal severance tax permanent fund under subsection (5) must be deposited in the new century fund.

(b) The state treasurer shall monthly transfer from the new century fund to the new century special revenue account the amount of earnings on the fund. After June 30, 2007, the state treasurer shall, prior to transfer to the new century special revenue account, retain in the new century fund the amount of interest that a prudent investor would retain to offset annual inflation, which may not be less than 5% of the earnings."

Section 2. Section 17-7-502, MCA, is amended to read:

"17-7-502. 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: 2-9-202; 2-17-105; 2-18-812; 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; 15-37-117; 15-38-202; 15-65-121; 15-70-101; 16-1-404; 16-1-410; 16-1-411; 16-11-308; 17-3-106; 17-3-212; 17-5-404; 17-5-424; 17-5-804; 17-6-101; 17-6-201; 17-7-304; 18-11-112; 19-2-502; 19-6-709; 19-9-1007; 19-17-301; 19-18-512; 19-18-513; 19-18-606; 19-19-205; 19-19-305; 19-19-506; 20-8-107; 20-8-111; 20-9-361; [section 6]; 20-26-1503; [section 11]; 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; 39-71-2504; 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; 75-11-313; 76-12-123; [section 16]; 80-2-103; 80-2-222; 80-4-416; 81-5-111; 82-11-136; 82-11-161; 85-1-220; 85-20-402; 90-3-301; 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. 7(2), Ch. 29, L. 1995, the inclusion of 15-30-195 terminates July 1, 2001.)"

Section 3. Section 23-5-610, MCA, is amended to read:

"23-5-610. Video gambling machine gross income tax -- records -- distribution -- quarterly statement and payment. (1) A licensed operator issued a permit under this part shall pay to the department a video gambling machine tax of ~~15%~~ 30% of the gross income from each video gambling machine licensed under this part. A licensed operator may deduct from the gross income amounts equal to amounts stolen from machines if the amounts stolen are not repaid by insurance or under a court order, if a law enforcement agency investigated the theft, and if the theft is the result of either unauthorized entry and physical removal of the money from the machines or of machine tampering and the amounts stolen are documented.

(2) A licensed operator issued a permit under this part shall keep a record of the gross income from each machine in the form the department requires. The records must at all times during the business hours of the licensee be subject to inspection by the department.

(3) A licensed operator issued a permit under this part shall, within 15 days after the end of each quarter, complete and deliver to the department a statement showing the total gross income from each video gambling machine licensed to the operator, together with the total amount due the state as video gambling machine gross income tax for the preceding quarter. The statement must contain other relevant information that the department requires.

(4) (a) The department shall, in accordance with the provisions of 15-1-501, forward ~~one-third~~ 16% of the tax collected under subsection (3) to the general fund.

(b) The department shall, in accordance with the provisions of 15-1-501, forward ~~the remaining two-thirds~~ 34% of the tax collected under subsection (3) to the treasurer of the county or the clerk, finance officer, or treasurer of the city or town in which the licensed machine is located, for deposit to the county or municipal treasury. Counties are not entitled to proceeds from taxes on income from video gambling machines located in incorporated cities and towns. The ~~two-thirds~~ local government portion of tax collected under subsection (3) is statutorily appropriated to the department as provided in 17-7-502 for deposit to the county or municipal treasury.

(c) Until June 30, 2008, the department shall deposit the remaining 50% of the tax collected under subsection (3) in the new century fund established in 17-5-703. Beginning July 1, 2008, the allocation under this subsection must be used for class four property tax relief."

NEW SECTION. Section 4. New century special revenue account -- uses. (1) There is a new century account in the state special revenue fund. Earnings on the new century fund established in 17-5-703 must be deposited in the account. The account must be used for research and development, historic preservation and development, and land stewardship.

(2) Beginning January 1, 1998, and ending June 30, 1998, the earnings must be transferred to the research and development special revenue account provided for in [section 6]. In the fiscal year commencing July 1, 1998, 25% of the account must be transferred to the Montana heritage preservation and development account provided for in [section 11] and 75% must be transferred to the research and development special revenue account. In the fiscal year commencing July 1, 1999, 15% of the account must be transferred to the Montana heritage preservation and development account, 75% must be transferred to the research and development special revenue account, and 10% must be transferred to the research and development endowment fund described in [section 7]. In the fiscal year commencing July 1, 2000, the account must be allocated as follows:

(a) 65% to the research and development special revenue account;

(b) 10% to the research and development endowment fund;

(d) 10% to the land stewardship account provided for in [section 16].

NEW SECTION. Section 5. Purpose -- definitions. (1) The purpose of the research and development special revenue account established in [section 6] and the endowment fund established in 17-5-703 is to provide a predictable long-term source of funding for research and development projects to be conducted by research and development centers located in Montana. The state is encouraging a diversified technology-based economic sector. The investment in research and development projects will assist in diversifying Montana's economy, provide employment opportunities for future generations, and enhance educational opportunities for Montanans.

(2) As used in [sections 6 and 7] and this section, the following definitions apply:

(a) "Board" means the Montana board of science and technology development provided for in 2-15-1818.

(b) "Program" means the research and development endowment program provided for in 17-7-502 and 23-5-610.

NEW SECTION. Section 6. Research and development account -- use. (1) There is a research and development special revenue account. The interest income and earnings on the account are statutorily appropriated, as provided in 17-7-502, to the board for the purposes provided in this section.

(2) The establishment of the research and development special revenue account in this section and the endowment fund in 17-5-703 and the pledge and appropriation of funds from video gambling tax revenue constitute a valid and binding obligation of the state to provide the money for a period of 20 years, provided that both research and development centers enter into contracts with the state, agreeing to undertake research and redevelopment projects and to make contributions to the endowment fund as required in [sections 5 through 7]. If the program ends prior to the end of the 20-year contract because of events described in [section 7(1)(c)] or any act of the legislature the state's obligation to appropriate money to the research and development account and the endowment fund ends.

(3) The research and development special revenue account may be used only for matching funds for grants from nonstate sources for research and development projects to be conducted at research and development centers located in Montana.

(4) The board shall make grants upon a determination that the proposed project meets the criteria established in 90-3-501, 90-3-502, 90-3-505, and 90-3-506.

(5) The board shall direct the state treasurer to distribute funds for approved proposals to the research and development center for administration of the grant project.

NEW SECTION. Section 7. Endowment fund -- accounts -- uses. (1) (a) There is within the coal severance tax trust fund a research and development endowment fund. The purpose of the endowment fund is to establish, by July 1, 2017, a permanent source of funding for research and development projects. The endowment fund must accept contributions as described in subsection (1)(b) and contributions from other sources. Interest earned on the endowment principal must be retained in the endowment fund until June 30, 2017, or to an earlier time that may occur pursuant to subsection (1)(c). Beginning July 1, 2007, interest earned on the endowment fund must be deposited in the research and development special revenue account and must be available to provide grants to research and development centers as provided in [section 6].

(b) Contributions by the research and development centers to the endowment fund must be made by July 1 of each year beginning July 1, 1998, and must continue through July 1, 2017. The contribution due on July 1, 1998, must be no less than 5% of the pro rata amount received through the end of the preceding fiscal year by each research and development center. The endowment fund may receive contributions from other sources. The endowment fund must contain accounts for each research and development center.

(c) At the end of each fiscal year, the research and development centers may jointly decide to discontinue participation in the program and shall notify the board that they do not intend to submit future grant proposals. The governor shall reflect the termination of participation in the program in the budget submitted to the next regular session of the legislature. If a research and development center does not make the required annual contribution to the endowment fund, the board may recommend to the governor that the state's participation in the endowment fund for that research and development center terminate. The governor shall make the final determination to terminate a research and development center's participation.

(d) If the program terminates pursuant to subsection (1)(c), the deposits from the coal severance tax permanent fund and the interest on the contributions revert to the coal severance tax permanent trust fund. The contributions by a research and development center and interest on the contributions revert to the research and development center.

(2) The endowment fund must be invested by the board of investments. Pursuant to subsection (1), earnings on the endowment fund must be deposited in the research and development special revenue account for distribution pursuant to [section 6(3)].

NEW SECTION. Section 8. Montana heritage preservation and development commission. (1) There is a Montana heritage preservation and development commission. The commission is attached to the Montana historical society for administrative purposes. The commission consists of nine members. The members must broadly represent the state. Five members must be appointed by the governor, one member must be appointed by the president of the senate, and one member must be appointed by the speaker of the house. The director of the Montana historical society and the director of the department of fish, wildlife, and parks shall serve as members.

(2) Of the members appointed by the governor:

(a) one member must have extensive experience in managing facilities that cater to the needs of tourists;

(b) one member must have experience in community planning;

(d) one member must have broad experience in business; and

(e) one member must be a Montana historian.

(3) Except for the initial appointments, members shall serve 3-year terms. If a vacancy occurs, the appointing authority shall make an appointment for the unexpired portion of the term.

(4) The commission may employ an executive director who has general responsibility for the selection and management of commission staff, developing recommendations for the purchase of property, and overseeing the management of acquired property. The commission shall prescribe the duties of the executive director.

NEW SECTION. Section 9. Purpose. The purpose of [sections 8 through 11] is to acquire on behalf of the state properties that possess outstanding historical value, display exceptional preservation qualities, are genuinely representative of the state's history and culture, and that have demonstrated the ability to become economically self-supporting. The commission shall achieve this purpose by purchasing fee title interests in real property and purchasing personal property.

NEW SECTION. Section 10. Powers of Montana heritage preservation development commission -- contracts -- rules. (1) (a) The Montana heritage preservation and development commission may contract with private organizations to assist in carrying out the purpose of [section 9]. Management activities must be undertaken in a way that encourages the profitable operation of properties. A contract for supplies, services, or both, may be negotiated in accordance with commission rules. The contract may be entered into directly with a vendor and is not subject to state procurement laws. A contract may be awarded pursuant to this section only when it is advantageous to the state to use direct negotiation in the procurement of new or unique requirements or new technologies or to achieve best net value. Contracts may include the lease of property managed by the commission. The term of a contract may not exceed 20 years. Provisions for the renewal of a contract must be contained in the contract. The commission may not contract for the construction of a building, as defined in 18-2-101, in excess of $200,000 without the consent of the legislature. Building construction must be in conformity with applicable guidelines developed by the national park service of the U.S. department of interior, the Montana historical society, and the Montana department of fish, wildlife, and parks. The commission, as part of a contract, shall require that a portion of any profit be reinvested in the property and a portion be used to pay commission costs.

(b) The commission may solicit funds from other sources. The operations of the commission and the portion of any contractor's work performed for the commission must be audited by the legislative auditor at least every biennium.

(2) The commission shall adopt rules establishing a policy for making acquisitions. With respect to each acquisition, the policy must consider:

(a) whether the property represents the state's history and culture;

(b) whether the property can become self-supporting;

(d) whether the property lends itself to programs to interpret Montana history;

(e) whether the property can contribute to the economic and social enrichment of the state;

(f) whether the acquisition will create significant social and economic impacts to affected local governments and the state; and

(g) other matters the commission considers necessary or appropriate.

(3) Public notice and the opportunity for a hearing must be given in the area of a proposed acquisition before a final decision to acquire a property is made. The commission shall approve proposals for acquisition and recommend the approved proposal to the board of land commissioners.

NEW SECTION. Section 11. Montana heritage preservation and development account. There is a Montana heritage preservation and development account. Proceeds from the operations of heritage properties acquired pursuant to [sections 8 through 10], contributions, grants, and gifts must be deposited in the account. The account is available for purchasing heritage properties and the continuing financial requirements of the properties. The account is statutorily appropriated as provided in 17-7-502.

NEW SECTION. Section 12. Revenue bonds -- purchase of Virginia City and Nevada City assets. (1) The board of examiners shall issue $9.5 million of revenue bonds pursuant to Title 17, chapter 5, for historic preservation and development purposes. The bond proceeds must be deposited in the Montana heritage preservation and development account provided for in [section 11]. The bond proceeds must be used for the acquisition and preservation of real and personal property owned by Bovey Restorations Inc. and the Historic Landmark Society of Montana in the communities known as Virginia City and Nevada City. Interest income from the new century fund established in 17-5-703 must be used to pay principal and interest on the bonds.

(2) The Montana heritage preservation and development commission, created in [section 8], is authorized to purchase and preserve the real and personal property acquired pursuant to subsection (1). The commission may deliver the purchase price to an intermediary designated by the seller, in its sole discretion. In addition the commission shall comply with the terms of the option agreement entered into by the state of Montana and the owners of the property. The commission shall cooperate fully with the seller in executing any documents reasonably necessary to effectuate an exchange of the property and take other steps necessary to carry out the seller's intent to complete a tax-deferred exchange under section 1031 of the Internal Revenue Code.

NEW SECTION. Section 13. Land stewardship commission. (1) There is a land stewardship commission. The board consists of seven members. Five members must be appointed by the governor, one member must be appointed by the president of the senate, and one member must be appointed by the speaker of the house. The board is attached to the governor's office for administrative purposes.

(2) Of the members appointed by the governor:

(a) two members must operate family farms or ranches and be active in regional or local agricultural organizations;

(b) one member must represent a regional or statewide land trust that has been in operation for at least 5 years;

(d) one member must be an employee or board member of a statewide agricultural organization that has been in operation for at least 10 years.

(3) Except for the initial appointments, members appointed by the governor shall serve 3-year terms. Legislative appointees shall serve 2-year terms. If a vacancy occurs, the appointing authority shall make an appointment for the unexpired portion of the term.

NEW SECTION. Section 14. Purpose. The land stewardship commission shall make funds available to acquire a permanent interest in land for the purpose of preserving rural landscapes while preserving working family farms and ranches. The commission shall achieve this purpose by:

(1) purchasing conservation easements;

(2) purchasing fee title for subsequent resale with retention of a conservation easement; and

(3) making grants available to nonprofit organizations entitled to acquire conservation easements in accordance with the purposes of the land stewardship commission.

NEW SECTION. Section 15. Land stewardship commission powers and duties. (1) The land stewardship commission may contract with private nonprofit organizations to assist in carrying out the purpose of [section 9].

(2) The commission shall adopt rules that establish a policy for making acquisitions. With respect to each acquisition, the policy must consider:

(a) only family farms and ranches;

(b) the threat of the use of the property being converted from traditional viable agriculture;

(d) positive impacts on long-term agricultural productivity beyond the boundaries of the acquired property interests;

(e) whether the property contributes to watershed quality and riparian zones;

(f) whether the property is important for maintaining landscape or watershed integrity in the context of surrounding land;

(g) whether the property is high in biological diversity or contributes to habitats for species of special concern, as rated by the Montana natural heritage program;

(h) potential social and economic impacts to affected local governments and the state; and

(i) other matters the commission considers necessary or appropriate.

(3) The commission shall approve proposals for acquisition and recommend the approved proposal to the board of land commissioners.

(4) The commission may solicit funds from other sources.

NEW SECTION. Section 16. Land stewardship account. There is a land stewardship account. The state treasurer shall, quarterly, deposit money in the account from the funds available under 17-5-703. The account is statutorily appropriated as provided in 17-7-502.

NEW SECTION. Section 17. Montana heritage preservation and development commission -- initial appointments. The initial appointments to the commission must be for the following terms:

(1) the member with experience managing facilities that cater to the needs of tourists, 3 years;

(2) the member with experience in community planning, 4 years;

(3) the member with experience in historic preservation, 5 years;

(4) the member with broad experience in business, 3 years;

(5) the Montana historian, 5 years; and

(6) the legislative appointments, 2 years.

NEW SECTION. Section 18. Montana land stewardship commission -- initial appointments. The initial appointments to the commission must be for the following terms:

(1) of the two members who operate family farms or ranches, one member, 5 years and one member, 3 years;

(2) the member representing a regional or statewide land trust, 4 years;

(3) the elected county official, 3 years;

(4) the employee or board member of a statewide agricultural organization, 5 years; and

(5) the legislative appointments, 2 years.

NEW SECTION. Section 19. Codification instructions. (1) [Sections 5 through 7] are intended to be codified as an integral part of Title 20, chapter 25, part 4, and the provisions of Title 20, chapter 25, part 4, apply to [sections 5 through 7].

(2) [Sections 8 through 11] are intended to be codified as an integral part of Title 22, chapter 3, and the provisions of Title 22, chapter 3, apply to [sections 8 through 11].

(3) [Section 13] is intended to be codified as an integral part of Title 2, chapter 15, part 2, and the provisions of Title 2, chapter 15, part 2, apply to [section 13].

(4) [Sections 14 through 16] are intended to be codified as an integral part of Title 77, chapter 2, and the provisions of Title 77, chapter 2, apply to [sections 14 through 16].

NEW SECTION. Section 20. Effective date. [This act] is effective July 1, 1997.

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