By Martin Kidston
Looking to close the gap on billions of dollars in outstanding road, bridge and water needs, the Montana Infrastructure Coalition is expected to lobby for an increase in fuel taxes, along with a bonding bill and a local option tax on tourism, when the Legislature convenes next year.
The coalition’s 70 members have spent the past year identifying what they deem to be critical infrastructure before reaching consensus on ways to increase funding to pay for the backlog.
The group released its list of objectives late last week.
“Current tools are not keeping pace with the physical and regulatory demands, and we haven’t adjusted these tools and funding formulas in decades,” said Darryl James, the coalition’s executive director. “It’s time to address the immediate problem and invest for the future.”
James said the Montana Department of Environmental Quality has identified $1.5 billion in current water and wastewater system upgrades, but only spent $165 million statewide in 2014.
The Montana Department of Transportation also has identified $14.8 billion in roadway needs by 2022, but only has an annual budget of roughly $700 million. The majority of that funding comes from grants provided by the Federal Highway Administration, though an anticipated $20 million shortfall in MDT funding could jeopardize the state’s federal subsidies.
“Montana’s primary source of state-generated revenue for roads and bridges is the fuel tax, and we haven’t raised the tax or adjusted the distribution formula in over two decades,” James said. “Total fuel tax revenues allocated to local roadways have been frozen for several decades at $16 million, and that’s shared statewide.”
While the fuel tax hasn’t been raised in decades, James said, the cost of roadway maintenance has grown 68 percent over the same period. Counties have not seen an increase in the allocation of fuel-tax revenues from the state since 1983.
Cities haven’t seen an increase since 1993, he said.
“A fuel tax increase will adequately fund MDT to fully leverage available federal funds, and provide a long overdue funding increase for city and county roadway and bridge improvements,” James said.
Earlier this year, the Missoula City Council’s Public Works Committee began discussing a potential gasoline tax of 2 cents per gallon. The move is permitted under a 1979 state law and would, if enacted, require support from the Missoula County Board of Commissioners.
Missoula attempted to adopt the tax twice before, once in 1994 and again in 2012. It was defeated by voters the first time and county commissioners the second time. A local fuel tax could generate round $630,000 annually.
The coalition also is eyeing a local option tax on tourism. James said the Montana Office of Tourism and Business Development estimates that over 11 million non-resident visitors spend nearly $4 billion each year during their travels across the state.
While the revenue represents a large part of the state’s economy, the economic benefits aren’t spread evenly across Montana. Only a handful of communities are permitted to tap the revenue stream through the existing resort tax, James said.
“With an emphasis on local control, each community should be empowered to decide whether a local tourism tax is appropriate in their area,” he said. “This would simply allow local jurisdictions the option to tax luxury items and capture revenue from tourism, reduce financial burdens on local taxpayers, and provide much-needed local monies for lagging infrastructure investment.”
While the group is expected to lobby for a reasonable bonding bill, it’s also looking for changes to the Treasure State Endowment Program. The program was established in 1992 to provide grants that help leverage other funding sources.
James said TSEP provided a regular cash flow through the Coal Tax Trust Fund until June, at which point the disbursement ended.
TSEP has been a fundamental tool for local governments as they cobble together enough funding to pursue badly needed water, sewer and bridge projects in their local communities, and that regular flow of monies must be reinstated.