Sheridan and County win lawsuit with governor over TSEP funding

A Helena judge decided in favor of Sheridan and Madison County in their efforts to overturn a line-item veto of a bill containing state funding for two major infrastructure projects.

In an order issued Monday, District Court Judge Jeffrey Sherlock said the Schweitzer’s line-item veto of portions of House Bill 351 was unconstitutional and the legislation should revert back to the form passed by the Montana Legislature in April.

“It is crucial to note that the line-item veto exercised by the governor did not reduce the total amount appropriated in HB 351 – it just reallocated those funds to different local governments. That discretion belongs to the legislature and not to the governor,” wrote Sherlock in his order.

House Bill 351 was the appropriation’s bill for the Montana Treasure State Endowment Program. This is a grant program administered through the Montana Department of Commerce and used to help local communities around the state fund infrastructure needs.

The department of commerce receives grant applications prior to each legislative session, prioritizes the grant applications and goes to the legislature for funding.

Last year, the department of commerce ranked the two Madison County projects very high. Funding for the Sheridan Wastewater Treatment facility was set at $750,000 and ranked third out of 36 projects statewide. Madison County was slated for about $700,000 to help with the replacement of Blaine Springs Bridge south of Ennis. This project was ranked seventh out of 36.

Those projects, along with six others around the state were line item vetoed by Schweitzer, in large part because legislators from those areas didn’t vote for the bill.

In his letter explaining the veto, Schweitzer wrote: “First, I vetoed projects located in legislative districts that did not receive the support of local legislators. This was the first analysis I used when considering whether limited state resources would be used to support the project.”

In September, Madison County and the town of Sheridan joined the town of Roundup and Fergus, Sweet Grass, and Carbon Counties in suing to overturn Schweitzer’s veto.

In his order, Sherlock sided with the counties and municipalities saying the governor has the right to veto an appropriation’s bill, but the prioritized break down of the funding within the bill couldn’t be subject to a line-item veto, particularly when the overall funding level of the bill remained the same.
Essentially, Schweitzer wasn’t reducing the total appropriations in the bill, just overriding the legislature’s decision on which projects received funding.

“In this case, if the governor were actually taking a certain dollar amount out of the appropriation allocated to a certain infrastructure project and reducing the total appropriation by that amount, such would be permissible. Here, since the amount of the total appropriation has stayed the same, but its allocation has been shifted from what the legislature enacted, the result is an impermissible modification of the legislature’s appropriation power,” wrote Sherlock.

Sherlock’s decision is only the first step in re-establishing funding for the two projects. Since Schweitzer’s veto, the department of commerce has moved other
projects up and promised communities funding for projects that didn’t initially make the cut, said Madison County Commissioner Dave Schulz.

“How do they fund those and turn around and fund us too?” Schulz asked.

Schweitzer could also appeal Sherlock’s decision to the Montana Supreme Court. As of Tuesday, the governor had yet to make a decision on an appeal.

His press secretary Sarah Elliot issued a statement on Monday.

“Montana has nearly $475 million in the bank in part because Governor Schweitzer has had the ability to stop overspending by the legislature. This ruling will make difficult for future governors to do what Governor Schweitzer has done by holding the line on spending. It is ironic that local governments sued us to spend more money against the advice of their own local legislators. The Governor remains committed to being fiscally prudent with taxpayer’s money,” Elliot wrote.

Bob Wagner represents Madison County and House District 71 in the legislature and voted against the TSEP bill on the third reading during the 2011 Legislative Session. It was this vote that led to Schweitzer’s attempt to pull funding for the two Madison County projects.

All along it was clear Schweitzer was using politics to try and get around his statutory boundaries, Wagner said.

“When the governor did this he was on a roll and you could see what was going on and you could see he got caught up in politics rather than his oath, just defending and protecting the law,” he said.

Wagner voted against the HB 351 on the third reading because of changes the bill made to how TSEP funds were allocated, not because he didn’t support the two Madison County projects.

“A lot of people don’t understand what this is about,” Wagner said.

The next step in the process is to wait and see if the governor appeals the decision. Meanwhile, both Sheridan and Madison County are moving on with their projects and looking for alternative funding sources.

“At this point we’ve won a battle,” said Sheridan Mayor Dean Derryberry. “Whether we’ve won the war or not is yet to be seen.”

Sheridan is hoping to put their wastewater treatment project out to bid next month. However, they have yet to secure the funding needed to complete the project, Derryberry said.

“We’ve gone in an looked at the project very, very hard,” he said. “We’ve done everything we could to cut costs where we could.”

The hope is to find some grant options to help complete the funding package for the project. More loans would inevitably mean higher sewer rates for Sheridan residents.

“The more our debt goes up the more our user rates go up,” Derryberry said.

But regardless, the town has to move forward with the project because the Montana Department of Environmental Quality has given them little choice.

“The state has given us no choice,” he said.

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