Bakken Spinoffs
6:35 am
Thu December 5, 2013

Oil Boom continues to strain infrastructure of Eastern Montana communities

(Note: This is the first of a six-part series on "Bakken Spinoffs" airing Thursdays through January 9th on "Montana Evening Edition.")

Sidney’s Mayor, Bret Smelser, stood at the corner of his community’s busiest street, Central Avenue. A steady stream of traffic, punctuated with big rigs, leaves thick white exhaust hanging in the frigid air. Smelser nodded to one truck.

“One of our city crew, collecting twice as much garbage as we did two years ago,” he said.

Eastern Montana’s economy continues to see a surge due to oil and gas development. Unemployment in the counties closest to the Bakken Oil Boom averages almost two percent below the state average. The oil industry brought in $200 million in tax revenue to the state and local governments last year alone. But all that activity comes with a cost, too, and Eastern Montana communities are feeling some of the biggest impacts.

Especially on their infrastructure.

Sidney is the clear Capital of Montana’s small share of the Bakken. Mayor Smelser says traffic is up as much as 50 percent in the last five or six years, pounding local roads into gravel. New hotels and housing are straining the city’s sewer system to its limit. The town brings in about $10 million dollars a year in taxes, but it has $55 million dollars in infrastructure needs right now.

“We do need some help out here,” Smelser said. “The people in Sidney have suffered enough we’ve raised their water and sewer rates, we’ve doubled their water sewer hookup fees. We’ve initiated impact fees.”

The oil industry in one way or another is largely responsible for these impacts. But, Smelser isn’t looking to the oil companies for more help. He believes the taxes they pay make sense and the companies give to the community in other ways--like to the local Boys and Girls Club. He’s looking squarely at state government; specifically, Governor Steve Bullock’s office.

And he’s not looking happy.

“It aggravates me, it’s a betrayal. I had a promise that it would be signed, that we would get some help from this Governor,” Smelser said.

He’s talking about a bill from the 2013 Legislature, House Bill 218. It would have provided $35 million dollars to Eastern Montana oil boom towns for their infrastructure needs. It passed both the Montana House and Senate with huge majorities. Smelser said the city of Sidney made calculated decisions to move forward with some projects.

“We thought that money was coming,” he said.

But the money didn’t come. Governor Bullock vetoed the Eastern Montana infrastructure bill—one of more than 70 bills he axed from this last legislative session.

“I had to veto $150 million dollars of either spending or tax cuts,” Bullock said, adding he had to do so to balance the budget—lawmakers left it spending more than the state was bringing in.

Also, Bullock maintained throughout the legislature he wanted to keep $300 million dollars of extra money in the bank for the next legislative session in 2015.

“To protect us from floods, fires, government shutdowns, all of those pieces that that was the number that ultimately as I managed the budget I wanted to make sure is there for a rainy day fund,” he said.

“Well, first of all, we know the revenue forecast ended up being much higher,” said Culbertson Republican Representative Austin Knudsen.

And he’s right.

The Governor’s own figures estimate the budget in 2015 to be about $350 million, $50 million dollars more than he wanted. Remember the infrastructure bill was $35 million. Those higher estimates were presented before the deadline for lawmakers to override the Governor’s veto.

Sidney Mayor Bret Smelser thinks Bullock should have convinced lawmakers, particularly Democrats, to bring the bill back to life when those higher revenue numbers were known.

Even without that bill, Bullock points out the state has invested $68 million dollars in loans or grants for Eastern Montana infrastructure since he took office.

“And that’s new money, from roads and bridges and water systems and other things,” he said.

That includes nearly $8 million just in the community of Sidney. Bullock said he’s actively looking for more ways to attend to these infrastructure needs.

Smelser has another idea for bringing more money to Eastern Montana oil communities. The Montana League of Cities and Towns says taxes on oil and gas production in Montana bring in more than $200 million dollars a year. States get 52 percent, counties get 25 and the school districts get 20-some percent.

Eastern Montana communities only get about one percent of those funds.

Smelser would like to see that changed.