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Federal Government Unexpectedly Takes Millions in Mineral Payments, Montana to Lose Over $2.5 Million

Photo courtesy of Tax Credits/Flickr

UPDATE – According to Office of Natural Resources Revenue spokesman Pat Etchart, Montana will be receiving a $2,520,706 revenue reduction. The roughly 2.5 million drop is directly related to sequester and the legislation effected is the Mineral Leasing Act.

Transcribed below is Etchart’s official statement –

“The Department of the Interior’s Office of Natural Resources Revenue (ONRR) this month notified impacted states and counties that monthly disbursements from energy production on public lands will be reduced the remainder of this fiscal year. The Budget Control Act of 2011, passed by Congress, mandates across the board, automatic 5.1 percent sequester reductions. By law, royalty payments to states are not specifically exempt from the sequester. Cumulatively, approximately $110 million will be withheld from states and counties where energy production occurs on federal lands during the remainder of the current fiscal year. ONRR recognizes the hardships this may impose on states, but it is obliged to fulfill its mission in compliance with the law.”

Jim Etchart::

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Original story -This week, March 24, news broke that the federal government would be keeping nearly $53 million in mineral payments that would normally have gone to Wyoming. It now appears that cuts could be coming to Montana as well.

Wyoming isn’t the only state that receives mineral payments, as a coal producing state, Montana also receives a significant amount of money through this program.

“In ’13 we’re expecting to get $34.2 million in the general fund. In ’14 we’re expecting to get $29.4 million in the general fund in U.S. mineral royalties,” said Jim Standaert, revenue analyst with the Montana Legislative Fiscal Division.   “Our budget is built on getting those two numbers deposited into the general fund. If they don’t come, that’s a big hit.”

So far, Governor Steve Bullock’s office and the office of the Department of Revenue have not responded to questions concerning potential cuts. When contacted, Budget Director Dan Villa was in a meeting with the governor.

It is highly likely that Montana leadership is just now finding out about potential cuts. According to the Associated Press, the news hit Governor Matt Mead of Wyoming by surprise as well.

It appears that the cuts are tied to sequestration in some way. Estimates on the size of cut Montana could face range from $1.5 million if the cuts are at 5% to upwards of $30 million in the next two years.

It is also possible that the cuts are only for Wyoming. According to Standaert, Wyoming was receiving a 50 – 50 split with the federal government while Montana dropped to a 48 – 52 split back in 2007. If Wyoming is simply dropping down to the rate that the rest of the states receive there could be no impact in Montana.




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