House Moves Forward with Scaled-back Fuel Tax Proposal

Taxes on gasoline would rise by 6 cents a gallon and on diesel by 2 cents a gallon by 2023

HELENA — The Montana House acquiesced Friday to a scaled-down version of a fuel tax package that would raise about $30 million a year — and many millions of dollars more in matching federal money — to repave cracked highways, reinforce weakened bridges and complete other roadwork.

The initial approval came as lawmakers and the governor’s office continued to work out deals over a state budget and an elusive infrastructure package in the waning days of the legislative session.

The issue of taxes, fees and other revenue enhancers are a perennial sticking point during the legislative session. And as the session draws to a close, about two dozen legislative proposals that would increase the state’s revenues remain unresolved.

When it came to the fuel tax, fiscal and political pragmatists prevailed over ideological purists who objected to the tax hike on gasoline and diesel, despite the Senate’s move to reduce the increases.

But even some of the chamber’s most rigid fiscal conservatives bent toward compromise.

“I certainly did not come here to increase the gas tax or any other tax for that matter,” said Rep. Nancy Ballance, a Republican from Hamilton who chairs the influential House Appropriations Committee.

“All of us in this body have heard that politics is the art of the possible, and it never became more clear to me,” Ballance said, “that it was impossible to stop this tax from going through. When the votes are there, the votes are there.”

Ballance joined the 61-39 majority on Friday’s initial vote. The chamber is expected to take a final vote on Saturday on whether to move the gas tax increase to Gov. Steve Bullock’s desk.

The chamber also finalized on Friday a companion bill dubbed the “Ferrari tax” because it imposes licensing fees on luxury vehicles, among other fees. The money would allow the state to shift gas tax revenues previously allocated to the Motor Vehicle Division and the Montana Highway Patrol back to road projects. The new revenues would help save the jobs of about two dozen state troopers.

Under the Senate’s proposal, taxes on gasoline would rise by 6 cents a gallon and on diesel by 2 cents a gallon by 2023. The earlier House version had proposed to hike the gas tax by 8 cents a gallon and on diesel by 7.25 cents a gallon.

The proposal would raise nearly $28 million in special revenues for the Department of Transportation during each of the next two years, and revenues are expected to rise more than $31 million annually thereafter. The amount of money available to the state for road construction would be multiplied by seven because the money would trigger an infusion of federal matching funds.

The bill’s lead sponsor, Republican Rep. Frank Garner of Kalispell, said it was time to take action on a bill that would fund scores of roadway projects in every county of the state.

“We’re unfunded by almost a billion dollars,” he said, noting that it’s been about a quarter century since fuel taxes have been hiked.

Opponents remained unswayed.

“This one runs so contrary to my way of thinking and my belief system,” said Rep. Theresa Manzella, another Hamilton Republican, who said increasing gas taxes would punish ordinary Montanans.

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