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Loss of local option fuel tax leaves hole in Missoula County road budget

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Posted at 1:18 PM, Sep 08, 2021
and last updated 2021-09-08 15:18:20-04

MISSOULA — Able to produce a 5% revenue match, Missoula County plans to complete 13 miles of preventative maintenance on roads stretching from Holland Lake to Missoula and south to Lolo.

While the match will permit the county to receive its full $362,000 allocation from the state’s Bridge and Road Safety and Accountability Act, (BARSA), it’s a drop in the bucket of what it could have accomplished had the Legislature not revoked the local option fuel tax.

The local option tax, adopted by Missoula voters last year, amounted to just 2¢ per gallon of fuel.

“We have several roads – Pattee Canyon, O’Brien Creek, Blue Mountain and Six Mile roads – that are failing,” said Erik Dickson with Public Works. “We’re doing the best we can to continue to patch, but an extra $500,000 to our budget would have gone a long way. That extra money would have taken us farther and put some very poor roads back into more serviceable condition.”

Despite a plea from Missoula County and others across the state, including the Montana Contractors Association and Montana Association of Counties, the Legislature passed and Gov. Greg Gianforte signed the revocation of the local option fuel tax.

Gianforte’s signature essentially overturned the will of Missoula voters, who adopted the 2¢ per gallon tax last year. It also reversed the desire of the 1979 Legislature, which gave Montana counties the authority to adopt the tax as a tool to raise revenue for transportation maintenance.

Now, Missoula County is scrambling to find ways to fill the funding gap.

“We would have been able to add to our inventory of care and reconstruction with dollar totals that would most likely continue to grow as we become an even more popular tourist destination,” said Missoula County Commissioner Josh Slotnick. “This wasn’t a one-time loss, it was a many, many year loss.”

The budgets of local governments across the state have grown increasingly tight in recent years as costs rise and the state reduces funding. But the 2¢ tax passed by Missoula County voters helped transfer some of the area’s infrastructure costs to the tourists who visit each year.

In theory, that took the burden off the shoulders of local taxpayers who, before the gas tax, shouldered the entire cost of local roadwork. Of the $1.1 million generated by the 2¢ tax annually, tourists contribute around $450,000.

That funding source is no longer available, leaving only the state’s BARSA reimbursement. That fund also stems from a statewide gas tax, though it’s shared by all counties. The local option tax would have stayed local, funding local projects.

It also would have provided a funding pool to provide a match for federal dollars.

“We had been hoping to use some of the local option gas tax as a match for Federal Land Access Program proposals, had we been so successful to win any of those grant dollars,” said Missoula County Commissioner Dave Strohmaier. “These would have gone to projects that would have accessed Forest Service or BLM lands in the county. It’s always been a struggle to come up with the match dollars for that program.

Up until Matt Regier, R-Kalispell introduced the bill quashing the fuel tax, the Legislature and state leaders had encouraged counties to adopt the local option fuel tax as a means to improve their transportation infrastructure, especially as state funding lags and the backlog of needs grew.

Regier suggested the local option gas tax was little more than a sales tax, one that hit lowest income earners the hardest. He said the 2¢ per gallon tax also made it hard for small fueling stations to compete.

He was backed by the state’s petroleum lobby.

More than six months later, Missoula County still disagrees, and it’s facing the impacts of the lost revenue once earmarked for road maintenance and repair.

“That money would not have ended this year,” Slotnick said. “It wouldn’t have been the beginning and the end of what we could have done with the gas tax.”