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Missoula business coalition lobbies for passage of 2-cent fuel tax, road improvements

Missoula business coalition lobbies for passage of 2-cent fuel tax, road improvements
Posted at 3:17 PM, May 12, 2020
and last updated 2020-05-12 17:17:30-04

With ballots in the mail, advocates of a proposed increase in the local gasoline tax are hoping to drum up support for the measure ahead of the June primary.

Backers of the proposal, which includes an coalition of local businesses, believe the 2-cent tax is a reasonable way to tap visitor spending and apply it to local infrastructure without raising property taxes.

“Vehicle damage caused by deficient roads costs drivers around $800 a year,” said Jim Bachand, CEO of the Missoula Organization of Realtors and a member of the Fix Our Roads campaign. “Right now, our visitors don’t help pay for any impacts on our roads. This small tax will help generate needed revenue to improve our streets.”

Missoula County commissioners voted unanimously in early March to add a referendum to the June primary ballot that would, if approved, increase the fuel tax in the county by 2 cents per gallon.

Missoula County estimates the tax would collect around $400,000 annually from tourists and net an additional $1.1 million overall. Most of the money would go into a special account dedicated only to road construction and maintenance while 1% would be used to reimburse the retail seller.

When used as a match for grants, every $1 million in fuel taxes could bring in as much as $7 million in state and federal highway grants. The city and county recently applied local matching funds to net a $13 million federal grant for road construction along the Mullan Road corridor.

Missoula County Commissioner Josh Slotnick said the 2-cent increase would help tackle local needs without raising taxes exclusively on property owners.

“We’re trying to come up with new tools that are much more fair and more responsible and focused than property tax,” Slotnick said during Monday’s State of the Community forum. “The one I’m really excited about is the gas tax and that’s on the ballot. The big challenge for us is to come up with other ways to provide services besides using property taxes.”

In a city survey, road maintenance emerged as one of the top priorities, though the needs outpace available revenue. A recent road assessment found that 33% of the city’s urban pavement was in good condition while 42% was deemed to be in poor condition.

A coalition of businesses have formed the political committee “Fix Our Roads: More Jobs, Less Potholes,” in hopes of seeing the 2-cent increase adopted by voters next month.

“We know that infrastructure funding is a critical need for our community and supports business growth and quality of life,” a letter written by the coalition states. “There are limited sources of revenue for roads – almost all road maintenance funding comes from property taxes. The gas tax would be a new source of revenue that brings in money from outside the city and county.”

Both the city and county budget around $6.5 million annually for road maintenance funding. The city maintains around 339 miles of roads while the county maintains around 440 miles.

That works out to around $19,000 a mile in the city and $14,000 a mile for the county. But calculations by Public Works suggest the city is spending about half of what it needs to in order to keep pace with maintenance needs, resulting in a $6.5 million annual funding gap.

The scenario is similar in the county.

Both the Missoula City Council and Missoula Board of County Commissioners are supporting the measure, though it has its share of opponents, including Dirk Cooper, president of High County Petroleum in Missoula and president of the Montana Petroleum Marketers and Convenience Store Association.

In a recent public forum, Cooper agreed that more revenue was needed to invest in transportation, and his organization lobbied for an increase in the statewide gas tax at the Legislature in 2017.

Still, he opposes the local fuel tax, saying it would create an unfriendly market for gas stations and convenience stores near the county line.

“There’s going to be an automatic 2-cent price disparity,” he told county officials. “That creates a very anti-competetive environment for anybody who is close to the county line and an advantage to their competitor who is right across the county line. The volume of fuel sold across Missoula will likely decline.”