Petroleum Tanks Release Cleanup Fund Transfer
During the biennium, the State of Montana faced an unusual budget deficit resulting from the most expensive fire season in state history and lower than anticipated revenues. The governor called the 65th Montana Legislature into a special session in November of 2017 to balance the budget and authorize transfers.The Legislature enacted House Bill 6, “Provide for Fund Transfers and Other Measures”, LC0019, 65th Legislative Session, Special Session 2017.
This resulted in a transfer of $1 million from the Petroleum Tanks Release Cleanup Fund (Fund) to the State General Fund on December 15, 2017.The transfer of $1 million amounts to one-seventh (14.28%) of the Board’s annual revenue. This can be expressed as a reduction in revenue for cleanup work. Funding reductions require the Petroleum Tank Release Compensation Board (Board) to adjust claim reimbursements.
When the Board authorizes funds, it prioritizes cleanup reimbursements based, in part, on site priority evaluations conducted by DEQ. One of the primary evaluations is the risk to human health or the environment. The Board then prioritizes using DEQ’s risk evaluations. Funds are allocated according to the severity of risk.
There are ways to help maintain balance in the fund. An example of this is when, in 2015, the Legislature allocated $385,000 from the Orphan Share account to DEQ, to be used by several programs. This reduced the demand on the Fund. Although the transfer reduces the amount of funds available for cleanups, if the demand for revenues by site cleanups is lower, the balance is maintained.
Another way the Fund stayed balanced is by a “Guarantee of Reimbursement” some Brownfield sites entered into with the Board. This means that cost recovery for cleanup expenditures at those sites will be postponed until 2019 and 2022. The amounts to be reimbursed are $200,000 in 2019 and $270,000 in 2022. While Brownfields loans are not income to the Fund, the agreements allow the delay of reimbursement until a future date.
The Orphan Share and Brownfields funding ($855,000) allowed the Board to spread the impact of the $1,000,000 transfer over a five-year period. No projects were denied immediate funding, reduced in size, or had to extend their time frames. Low-priority releases may be delayed until funding is available.