(CN) – A thick haze of smoke hangs over the town of Seeley Lake in western Montana this week, where wildfires have forced people to evacuate their homes.
Some 600 miles away, clouds of steam can be seen rising from the tall cement columns of the Colstrip electric generating facility, which burns coal to produce electric power. The two scenarios – severe wildfire and a coal-fired electrical plant – are hundreds of miles apart, but they are inextricably linked in Montana.
Three years of declining revenues from coal mining in eastern Montana have left the state budget in tough shape. In June, Montana budget officials said state agencies would have to find ways to trim some $93 million from their budgets.
Coal's decline in Montana has contributed to the state's struggling budget, and in a year when forest fires are their worst in decades the money is running tight for firefighting. Wildfires have burned more than 550 square miles of forests and prairies, and the Lodgepole Fire, the largest wildfire in Montana, has burned nearly 300,000 acres, according to federal figures.
At the end of June there was only $12 million remaining of Montana's $63 million firefighting fund, and the state was spending that at a rate of $1.5 million a day, according to Montana Department of Natural Resources and Conservation director John Tubbs.
"We will use up the remaining balance in fairly short order," he said.
The Federal Emergency Management Agency recently accepted Montana’s appeal for financial help after initially denying the state’s request for funds to help fight the Lodgepole Complex fire.
Among coal-producing states in the nation, Montana is not alone its revenue woes.
Wyoming, too, is facing budget shortfalls from declining coal revenues. State and local governments receive coal revenues through the Wyoming's mineral severance taxes, federal mineral royalties, sales taxes with purchase of equipment, supplies and services, coal lease bonuses, and property taxes. All contribute to what Wyoming receives from coal mining, according to Wenlin Liu, the state’s chief economist.
Liu said in an interview that about two-thirds of Wyoming's general fund revenue is from the mineral extraction industry, and about 20 percent of Wyoming's budget comes directly from coal mining.
The revenue picture looks even more bleak down the road.
While coal prices are expected to be relatively stable, production is forecast to decline, from about 300 million tons in 2016 to 280 million tons in 2020, Liu said.
Wyoming's coal lease bonus payment, which is set aside for the state's new school construction and was $219 million in 2016, is projected to be zero by 2019 if there are no more new lease sales, Liu said.
Coal revenue for Wyoming has been gradually declining since 2011. Liu said the state's mineral severance taxes from coal was $294.3 million in fiscal year 2011, and fell to $217.8 million in fiscal year 2016. The assessed valuation for coal mining production was $4.3 billion in 2011, but dropped to $2.9 billion in 2016, Liu said.
Coal mining traditionally has been one of Montana's strongest corporate sectors. But the decline in coal revenues has forced Montana to cut money from school and social programs, according to the governor's budget office. The Office of Public Instruction must cut at least $19 million over the next two years, while the Department of Public Health and Human Services will have to cut $26 million.
West Virginia, one of the nation's largest producers of coal, faces similar circumstances.