Brand g. Boyar r. Stephen browning katharine s. Donnelley mark d. Etchart oliver h. Goe

1BROWNING, KALECZYC, BERRY & HOVEN, P.C. ATTORNEYS AT LAW
G. ANDREW ADAMEK KIMBERLY A. BEATTY LEO BERRY BRAND G. BOYAR R. STEPHEN BROWNING KATHARINE S. DONNELLEY MARK D. ETCHART OLIVER H. GOE AIMEE GRMOLJEZ J. DANIEL HOVEN	Mailing Address POST OFFICE BOX 1697 HELENA, MONTANA 59624 TELEPHONE [phone] [e-mail]	Street Address 139 NORTH LAST CHANCE GULCH HELENA, MONTANA 59601 TELEFAX [phone] www.bkbh.com	STANLEY T. KALECZYC CATHERINE A. LAUGHNER DAVID M. MCLEAN CRAIG M. MUNGAS SARA B. STANTON MARK R. TAYLOR KIMBERLY L. TOWE STEVEN T. WADE LEO S. WARD

MEMORANDUM
TO: Montana Rural Water Systems

FROM: Steve Wade

DATE: June 2005
RE: 2005 End of Session Report

The following is a report and analysis of the 2005 Montana Legislative Session as well as discussions of anticipated events in the State of Montana or relevance to Montana Rural Water System (MRWS). Enclosed is a report on the bills that have been tracked for MRWS throughout this legislative session.

It was a pleasure working with MRWS during a successful Legislative Session. I look forward to working with you in the future.
1. Situation Analysis/Legislative Climate
The Montana Legislature convened on January 3, 2005 and adjourned on April 21, 2005. During the 2005 Legislature the House of Representatives was split evenly between Republicans and Democrats, with the Speaker’s position going to a Democrat pursuant to statutory provisions related to split control of a legislative House. The Democrats controlled the Senate and the Governor’s Office. The Republicans retained control over the Secretary of State’s Office. Democrats controlled the Attorney General’s Office, the State Auditor’s Office, and the Office of the Superintendent of Public Instruction.
Leadership positions were held in the Senate by:
Senator Jon Tester (D-Big Sandy), President of the Senate

Senator Dan Harrington (D-Butte), President Pro Tempore

Senator Jon Ellingson (D-Missoula), Senate Majority Leader

Senator Bob Keenan (R-Bigfork), Senate Minority Leader

Senator Carolyn Squires (D-Missoula), Majority Whip

Senator Trudi Schmidt (D-Great Falls), Majority Whip

Senator Robert Story (R-Park City), Minority Whip

Senator Corey Stapleton (R-Billings), Minority Whip

Leadership positions were held in the House by:
Representative Gary Matthews (D-Miles City), Speaker of the House

Representative David Wanzenried (D-Missoula), House Democratic Leader

Representative Roy Brown (R-Billings), House Republican Leader

Representative John Parker (D-Great Falls), House Democratic Floor Leader

Representative Michael Lange (R-Billings), House Republican Floor Leader

Representative Gail Gutsche (D-Missoula), House Democratic Whip

Representative Bob Bergren (D-Havre), House Democratic Whip

Representative Debby Barrett (R-Dillon), House Republican Whip

Representative Dennis Himmelberger (R-Billings), House Republican Whip
In general, the 2005 Montana Legislative Session’s prime thrust was to address education funding after the Supreme Court ruling found that the Montana Legislature was not adequately funding quality public education in accordance with the Constitution of the State of Montana. This issue was not fully addressed in the 59^th Legislature, and a special session will be held in December to further debate the issue.
The total budget for the State of Montana is approximately $7 billion. Although education funding was a high priority for the 59^th Legislature, health and human resources needs got the biggest piece of the pie, with general government needs a distant second, and education funding following that. The budget continues to be an ongoing issue in Montana. The state is constitutionally mandated to balance its budget under Article VIII, Section 9 of the Montana Constitution, which states that “Appropriations by the legislature shall not exceed anticipated revenue.”

2. Legislation of interest to MRWS

The following is a brief discussion of some of the bills that we actively lobbied for MRWS. Please refer to the attached table for an update of legislation tracked for MRWS.

Bill Supported and Enacted

• 
  HB 22 - Funding for water adjudication
  

HB 22 provides the findings and purpose of implementing a water adjudication fee. It provides benchmarks and actions that must be taken, including elimination of the fee, if benchmarks are not met by the Department of Natural Resources and Conservation. The bill also allows the reexamination, prior to the issuance of a final decree, of claims in basins that were verified.

The bill defines “owner” for purposes of the water adjudication fee, establishes water adjudication fees, and provides that the fee does not apply to federal water rights and Indian reserved and aboriginal claims to water. Under this legislation the Department of Revenue is responsible to collect the fee on behalf of the Department of Natural Resources and Conservation. The Department of Natural Resources and Conservation is required to assign any unpaid fees to the Department of Revenue for collection. A lien may be placed on a water right if the fee is not paid after collection efforts.
This bill establishes a water adjudication account and establishes the amount of revenue allocated each year from the account. The fee may not be assessed once $31 million has been deposited in the adjudication account. The Department of Natural Resources and Conservation and the water court are required to report to the Environmental Quality Council and the applicable legislative appropriation subcommittees. The bill provides the process for examination of claims in verified basins prior to the issuance of a final decree.
Because this bill had a contingent voidness clause, voiding the act if the spending authority was not contained in HB 2 the status of this bill is currently uncertain. The spending authority was not contained in HB 2, and the Department of Natural Resources has requested an Attorney General’s Opinion on the status of HB 22. The Legislature’s attorney has already opined that the bill is void. Nevertheless, since the fees were not to be collected until next year, the Environmental Quality Council has requested that this matter be included in the call of the December 2005 special legislative session. As a result, the problems with HB 22 should be corrected by the end of the year.

• 
  HB 666 - Revise laws related to county water and sewer districts
  

HB 666 was MRWS’s bill relating to bond elections of water and sewer districts. It authorizes petitions by all property owners for the creation of a district, appointment of directors, and the incurrence of indebtedness and clarifies the effect of protests against a method of levying special assessments. It also clarifies protest requirements and assessment procedures for condominium property, authorizes the issuance of revenue bond and special assessment bond indebtedness without an election, and clarifies the authority to establish subdistricts.

• 
  SB 124 - Interim bridge or gap financing for regional water systems
  

SB 124 allows money in the Treasure State endowment regional water system special revenue account to be used to pay the costs of eligible projects on an interim basis.

Bills Opposed that Did Not Pass

• 
  HB 342 - Revise laws on sewer districts
  

HB 342 sought to eliminate the ability of the governing body to overrule a protest for a sanitary sewer district.

• 
  HB 622 - Revise requirements for private water distribution system
  

HB 622 would have provided an exemption to public water supply system requirements for certain associations. It also defined the term “Association” as “a private group of individuals that has organized for the purpose of providing themselves with a drinking water supply.”

3. Special Session

No definite schedule has been set for December’s special session. The special session is expected mostly to address the actuarial soundness of the Public Employees Retirements System and the Teachers Retirement System, as well as education funding, but can always be expanded to include other issues (such as the HB 22 issue mentioned above). We will keep you posted of any legislation of interest that may arise out of a special session.

4. Other Items of Interest/Continuing Issues

The following is a list of Representatives that have been termed out and will not be eligible for re-election to their current seats in 2006:

Joan Anderson (R-Fromberg) – Vice Chair of the Education Committee

Roy Brown (R-Billings) – House Republican Leader

Rosalie “Rosie” Buzzas (D-Missoula) – Chair of the Appropriations Committee

Paul Clark (D-Trout Creek) – Vice Chair of the Judiciary and Fish, Wildlife, and Parks Committees

Tom Facey (D-Missoula) – Vice Chair of the Human Services Committee

Kathleen Galvin-Halcro (D-Great Falls) – Chair of the Education Committee;

Vice Chair of the Business and Labor Committee

George Golie (D-Great Falls) – Chair of the Fish, Wildlife, and Parks Committee

Gail Gutsche (D-Missoula)

Verdell Jackson (R-Kalispell)

Carol Juneau (D-Browning) – Vice Chair of the Appropriations Committee

Monica Lindeen (D-Huntley) – Chair of the Select Committee on Education

Gary Matthews (D-Miles City) – Speaker of the House

Mark Noennig (R-Billings) – Chair of the Local Government Committee

The following is a list of Senators that have been termed out and will not be eligible for re-election in 2006:
Jim Elliott (D-Trout Creek) – Chair of the Taxation Committee

Bob Keenan (R-Bigfork) – Senate Minority Leader

Glenn Roush (D-Cut Bank) – Chair of the Natural Resources Committee

Jon Tester (D-Big Sandy) – President of the Senate

The state budget and tax policy continue to be major issues. The new tax policies and the budget passed by the 2005 Legislature balance the state budget for the immediate biennium, in accordance with the Constitution of the State of Montana.
Other issues that will continue to permeate Montana’s political climate are:
Coal Bed Methane Development

Tort Reform

Tax Reform

Judicial Reform

Environmental Protection