By Tom McCoy
One of MSU's top priorities during the 1999 Legislative session was to achieve a stable source of
state matching funds for the federal research grants that require them. The university system has
struggled with this issue for some time, and this year several administrators and legislators went
into the session eager to put into place a permanent funding mechanism. Doing so would provide badly
needed dollars for research programs closely tied to economic development and student training.
It would also convince federal agencies that Montana is truly interested in a state-federal
partnership when it comes to funding science and technology.
The result of all that work is House Bill 260, which won final approval by both houses on the
last day of the session.
In brief, HB 260 changes the way taxes are levied on coal extraction in the state. The bill
reduces the overall coal severance tax and creates a new coal producers license tax. Some of
this new tax goes into the Coal Tax Trust Fund, the state's "rainy day account." The rest of
the new tax will be set aside in a special trust for various projects, including loans and
matching funds for nonstate research grants. The university system, tribal colleges, colleges
of technology, community colleges, agricultural research centers and private, nonprofit
labs are eligible for these matching dollars, estimated to total between $4 million
and $5 million a year.
That's the good news. The bad news is that the bill rests on uncertain legal ground.
The argument here is twofold: first, that the coal producer's license tax is in reality
a severance tax and therefore requires a three-fourths vote to be used in the manner
described in HB 260; and second, that you cannot have an appropriation and a tax in the same bill.
The legal counsel for the Legislature believes these arguments are invalid. However,
if the bill is challenged and found unconstitutional, there currently is no other
source of state matching funds for this biennium.
I might add that while both sides of the aisle supported state matches for research,
they sharply disagreed on how to provide those funds. The Democrats preferred establishing
a trust within the coal tax trust and dedicating interest from this inner trust to research matches.
The Republican alternative was to divert the coal tax dollars at the point of collection,
a variation of which appears in HB 260. The debate at times was rancorous, and the university
system found itself caught in the middle. Our position was a pragmatic one: We were willing to
accept any measure that would provide an appropriate level of support and that could be passed
by this Legislature.
In the end, the 1999 Legislature, for the first time, endorsed and supported a long-term
commitment to matching funds. What's more, it was heartening to hear a number of senators
and representatives publicly touting the role that university research can play in the
economic development of Montana. We have seen a number of companies and products enter
the marketplace in Montana as a result of university research as well as an increasing
number of students who have found high-tech jobs in their home state. We are eager
to continue these and other research and education efforts with the support the state has given us.
Tom McCoy is MSU vice president for research.
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May 1999 
