MTPR

State Roads, Bridges Get Help From Gas Tax Pending Trump Infrastructure Plan

Feb 13, 2018

The increased gas tax Montana lawmakers passed last year collected more than $6 million in its first four months. That money is going to city and county governments to pay for roads, bridges and other street maintenance projects. But changes at the federal level could leave local projects in limbo.

Montana’s aging infrastructure received a C-minus grade in 2014 from the American Society of Civil Engineers. The group said Montana’s roads and bridges need an estimated $14.8 billion dollars worth of maintenance and repair.

State lawmakers passed a 4.5 cent per gallon increase to taxes on gasoline, and half-a-cent on diesel last year to fund some of those projects. The taxes went into effect on July 1, and will go up in future years.

Last week, cities and counties were notified of how much money they’re eligible to get from the first four months of the increased gas tax, which will be available March 1. Distributions range from just over one thousand dollars to the town of Rexford to more than half a million dollars for Billings.

Local governments must have a plan to use the money and a $1 match for every $20 they're seeking.

Greg Robertson is the head of public works projects in Missoula County, which is set to receive around $119 thousand, one of the largest distributions from the new taxes' initial collection.

Robertson says the county doesn’t have a plan yet for how it will use the money, but he says one idea might be to put it in the bank and save up for larger projects.

“If you were to build something new the general rule of thumb is a million dollars a mile, so that $100,000 and change isn’t going to get you very far," he says. "But, you know, any help is appreciated.”

The new taxes mean the state levy on gasoline tax went from 27 cents a gallon to 31.5 cents. The diesel tax went from 27.75 cents to 29.25 cents. It’s the first state fuel tax increase in more than 20 years.

By 2023, those taxes will increase by two-and-a-half more cents for a gallon of gas, and another half-a-cent for diesel.

Even with increased funding from the new state gas tax, Robertson says changes in how the federal government funds road projects in recent years has reduced how much money states and counties, especially rural ones, have for infrastructure projects.

“At least in Missoula County we still have reduced revenues compared to what we had a few years ago," he says.

Lynn Zanto, transportation planning administrator with the Montana Department of Transportation, says next year cities and counties will have a full year's worth of increased taxes available. About one-third of the tax increase goes to the department for state road and bridge projects that leverage matching federal funds.

Zanto says that while the increased gas tax revenue is much appreciated, it does little to address the department’s long-term funding needs.

"There's not enough revenue to meet the needs," Zanto says. "We have just under $15 billion worth of needs over a ten year period."

The law that enacted the new gas and diesel taxes also requires the state Department of Transportation to maintain a projects website detailing how revenues raised through the gas tax are being used. That site is expected to launch by July 1.

Darryl James is the executive director of the Montana Infrastructure Coalition, which is made up of construction industry and trade groups, unions and local governments. He says the increased gas tax is a good start to addressing Montana’s aging and underfunded road system, but agrees it’s not a reliable long-term fix.

"We're seeing greater fuel efficiency," he explains. "We're seeing more electric and hybrid vehicles. So we would certainly expect to see a decline in the growth of that revenue stream as well."

On the other hand, James is optimistic about President Donald Trump’s infrastructure plan, unveiled Monday, which James says is the most sweeping federal-level infrastructure plan in years.

"I credit the plan coming out of the White House right now as being solid recognition of the problem that exists," he says. "Neither Congress nor our state legislature has been willing to step up and say this is a priority issue."

Trump’s plan is to create incentives for state and private sector investment in infrastructure projects, which James supports conceptually, but adds, "In Montana we see that those public-private partnerships are pretty limited in applicability."

For example, James points to Montana’s unwillingness to levy a sales tax or highway toll to raise funds for infrastructure projects, which he says would tap tourists to help maintain Montana’s infrastructure.

He says a loss in federal funds would be an untenable position for Montana.

Instead, James sees help for the Treasure State in Trump’s proposed Rural Infrastructure Program, which earmarks $50 billion of the plan’s total $200 billion to be allocated to state governors for locally-prioritized projects, with remaining funds distributed based on rural performance grants.