Montana bill would increase gas tax; plea made to include diesel

By Keith Goble, Land Line state legislative editor | Friday, January 30, 2015

A Montana legislative panel heard testimony this week on a bill that would increase the state’s gas tax rate by 5 cents to benefit local roads and public transportation. The state’s diesel tax rate would be unchanged.

Multiple groups, however, testified in front of the House Transportation Committee on Wednesday, Jan. 28, about the need for a bigger tax increase and applying the higher rate to diesel.

Montana’s gas tax rate now is set at 27 cents per gallon and the diesel rate is set at 27.75 cents. The gas tax has remained unchanged since 1994.

Sponsored by Rep. Nancy Wilson, D-Missoula, the bill would increase the state’s gas tax rate to 32 cents per gallon to pay for local roads and public transportation. Revenue raised through the nickel increase is estimated at $25.08 million each year, according to the Montana Department of Transportation.

Wilson told the panel the bill would help the 46 percent of major roads that are in poor to mediocre condition and the 40 percent of gravel roads that are in poor or failed condition.

“Counties and local governments need help,” Wilson testified.

As introduced, HB275 would allot three cents of the increase to counties, cities or towns for local road and street repairs – $15.05 million. Revenue from the other two cents would be allocated to match federal funds for public transportation – $10.03 million. If federal grant funds are not available, the allotment would be rerouted to the state DOT.

Cary Hegreberg, executive director of the Montana Contractors Association, thanked lawmakers for “teeing this issue up” but he said the group doesn’t feel the bill does enough.

“The bill needs to be seriously amended to say 10 cents a gallon increase for both the gasoline tax and the diesel tax,” Hegreberg said. “We think the majority of that revenue should flow to the Montana Department of Transportation for state funded construction projects that address a variety of needs around the state.”

“Spook” Stang, executive vice president of the Montana Motor Carriers Association, said he agrees with Hegreberg about the need to do more than the bill as introduced would accomplish.

Addressing concern that the panel might not advance the bill with a 10-cent increase for gas and diesel, Stang called on lawmakers to pursue a study bill to “force the Legislature to sit down and look at investment in our infrastructure.”

“We don’t want to sit (the issue) down and have it kicked down the road for the next 21 years.”

He also called on lawmakers to review whether the tax rate should be indexed to allow for regular increases.

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