A Busby lawmaker is proposing legislation intended to let Big Horn County negotiate a collection agreement with a troubled coal company that owes more than $8 million in delinquent taxes to the county.
The proposal has the backing of county officials and Navajo Transitional Energy Co. (NTEC), which bought the debt-saddled Spring Creek Mine from its bankrupt parent company last year. But some Democratic lawmakers and at least one environmental group have warned that the bill could allow NTEC or other companies to ultimately pay less than they owe.
Senate Bill 154, sponsored by Republican Sen. Jason Small, doesn’t specifically name NTEC or Big Horn County. But Small, the Big Horn County commissioners and a company representative were clear that the legislation was drafted with its unpaid coal taxes in mind.
People are also reading…
“It’s allowing the company, which took over the obligation of the taxes on that transaction, to set up a payment plan with the county,” Small told the House Taxation Committee during Tuesday’s hearing on his bill.
The county and NTEC had previously discussed the possibility of a deal, but state law doesn't explicitly state that the county has the authority to enter into those types of agreements, Small added.
The collapse of coal has struck Big Horn County especially hard in recent years. County taxpayers historically enjoyed low tax rates, with coal mining accounting for a large share of the budget.
NTEC assumed the tax liability of the Spring Creek Mine when it bought Cloud Peak Energy in a bankruptcy sale in 2019. As of Tuesday, it owed Big Horn County $8.8 million in gross proceeds taxes, which are collected on the amount of coal mined, Big Horn County Treasurer Denise Rios said in an interview Tuesday. The nearby Decker Mine, owned by Decker Coal, owes the county another $2.9 million in delinquent coal taxes, plus nearly $400,000 in county property taxes.
Last November, Big Horn County was forced to ask voters to raise taxes to pay for ambulance and public safety funding.
Small’s bill would allow counties to work with companies to settle the terms of a payment plan for back taxes owed on gross coal proceeds, interest and penalties. It requires the county to get the state’s permission, consult with the governor’s budget office and hold a public hearing before signing such a deal. The legislation also allows the county to issue bonds backed by the promise of money under the payment plan.
Along with NTEC and the county commissioners, the measure won support from the Montana Association of Counties, which Small said helped to draft the bill, and Montana Association of Oil, Gas and Coal Counties.
Jason Riddle, a lobbyist for MACo, noted that if the company failed to make payments under the installment plan, the matter would revert back to where it started, per the terms of the state’s delinquent tax code.
“So there’s really no risk from the standpoint of what happens if the producer quits paying on the agreement,” Riddle said. “This is about getting dollars that maybe we couldn’t recover under other circumstances. It’s about saving some jobs, potentially.”
But Derf Johnson, a lobbyist for the Montana Environmental Information Center, said that with the coal industry in “an absolute freefall right now,” an installment plan that lets a coal company delay its tax payments further could backfire for the county if NTEC were to declare bankruptcy.
He added after the hearing that he’s also concerned that the bill could open the door to the company pushing local officials into a bad deal for the county. When push comes to shove, Johnson said, the company could threaten to close the mine altogether, and lay off the 260 workers that officials say are still employed there.
“They have that card, and they can play that card,” Johnson said. “I think it’s going to be a very political negotiation.”
The House committee didn’t take any immediate action on the bill. It passed the Senate last month with bipartisan support on a 43-7 vote.
