Two bills to help transfer 26,000 acres of Plum Creek timberland to state ownership and create a loan fund for the struggling timber industry cleared another legislative hurdle this week, but not without some changes to the loan-fund bill.

The Senate Natural Resources Committee endorsed the measures Monday evening, sending them on to the full Senate for further action, probably next week.

Rep. Chas Vincent, R-Libby and the chief sponsor of both measures, said Tuesday the changes in the $7.5 million loan-fund measure, House Bill 669, shouldn't affect its goal of helping smaller timber-industry businesses in Montana survive the current economic downturn.

"We are confident that the money will be getting in the hands of those who need it most," he said.

The committee endorsed the loan fund's companion bill, House Bill 674, without any changes.

But Vincent and other supporters of the measures must secure votes from at least two-thirds of the Senate to pass HB674, because it creates state debt. It authorizes the state to sell $21 million in bonds to finance the state purchase of the Plum Creek timberland in Missoula County.

The timberland to be purchased under HB674 is part of the $490 million Legacy Project that is transferring 310,000 acres of Plum Creek timberland, mostly to public and nonprofit ownership.

The state plans to take control of 100,000 acres as part of the project, including the 26,000 acres authorized for purchase by HB674. That land is primarily east of Missoula between the town of Potomac and Interstate 90.

Plum Creek had been considering selling off much of the land to private developers. At Monday's hearing, a dozen people from Potomac and the surrounding area testified in favor of both bills, saying transfer of the Plum Creek land to the state would keep it open to the public and more available for timber harvest, recreation and other uses.

"We all think that state ownership is the best thing for our community," said Dennis Iverson, a Potomac rancher.

The lands would be transferred to the state for management as state forest land.

Vincent said it's important to explain to senators that HB674 contains more than just the purchase of the land.

It says the state must sell off an equal amount of state land elsewhere, so there is no net increase in state lands. It also requires the state Department of Fish, Wildlife and Parks to involve local governments when it purchases additional property.

The Senate committee on Monday made several changes to HB669, primarily at the request of the state Department of Commerce.

The amendments create two loan funds, so that one can accept an additional $2.7 million in federal funds.

They also say that once the loans are repaid, the money could be loaned out to any "primary sector businesses," and not just timber businesses.

The initial loan funds would offer loans of up to $2 million to small timber mills and other timber businesses, to be repaid in 15 years.