Guest Column

Federal Actions Threaten Montana’s Way of Life

Our elected officials must be smart and diligent in how they approach energy development

By Matt Regier

Montana is a vast state with a landscape populated by large mountain ranges, crystal-clear lakes, and lively ecosystems — we are not known as Big Sky Country for nothing.

Amid all this biodiversity is an abundance of natural resources that have long powered Montana’s homes and businesses and brought in millions of revenue annually for our communities. However, recent federal proposals regarding oil and gas leasing and taxes threaten the benefits that the energy industry brings to Montana, potentially impeding our way of life and harming the livelihoods of everyday workers across our state.

As a born-and-bred Montanan and current member of the Montana House of Representatives, I am concerned over the energy approach that is being taken by federal officials. I was disappointed to see the Keystone XL Pipeline canceled, which coupled with the temporary pause in federal oil and gas drilling permits, has cost our state millions and reduced our nation’s energy independence. Federal proposals on increasing taxes to raise funds for infrastructure — specifically raising the corporate tax from 21% to 28% and the Global Intangible Low Tax Income (GILTI) rate from 10.5% to 21% — also have me worried as these changes could imperil American companies at a time when they need support, not additional financial burden. 

Regarding federal oil and gas leasing, allowing energy companies to responsibly extract resources like natural gas and oil from Montana, provides critical energy and revenue to communities in every corner of our state. In Montana, nearly 30% of our land is owned and managed federally. According to the Department of the Interior, Montana had nearly $25 million in federal oil and gas revenues last year. Overall, revenues from oil and gas operations make up 5.6% of our General Fund Budget, which allocates funding for education, health, and conservation programs. 

However, an analysis by the University of Wyoming estimated that a ban on oil and gas drilling on federal lands would cost Montana $100 million in lost revenue and the loss of over 600 jobs by 2024. After one of the largest and most devastating health and economic crises in our country’s history, our state cannot afford to lose these reliable jobs and critical revenue. Enacting any sort of permanent federal leasing ban, or even implementing further restrictions to the program, would spell trouble for Montana’s communities that rely on the energy industry for employment and funding. 

Furthermore, the proposed changes to the corporate and GILTI tax rates threaten to add an increased financial burden to Montana’s recently reopened businesses and enterprises, potentially undermining our state’s economic recovery from the coronavirus pandemic. A study released by the nonpartisan Tax Foundation shows that laborers feel “between 50% and 100% of the burden of the corporate income tax, with 70% or higher the most likely outcome.” This comes after researchers observed an “inverse correlation” between corporate taxes and wages. 

Raising the GILTI rate is also problematic for Montana’s workers and businesses. This tax is designed to keep the profits of American multinational companies within the United States. At the current rate of 10.5%, it has been effective in reducing incentives for U.S. firms to invest overseas and has increased domestic employment among U.S. multinational companies by 2.1% since its inception in 2018. Nonetheless, if the GILTI rate is increased then it will have unintended economic consequences on both American companies and workers and could reduce domestic employment. 

It is important that any federal policy regarding energy, specifically natural gas, does not negatively impact economic development and growth in energy states like Montana. The production of oil and natural gas supports a wide variety of jobs, suppliers, and communities in Montana — they would suffer if the industry were further burdened by ill-devised tax and leasing measures.

Our elected officials must be smart and diligent in how they approach energy development so that Montanans and other energy state residents do not feel the worst of any unintended policy consequences. A feasible policy balance must be found between federal infrastructure and climate goals and the reality of energy industry operations.

Matt Regier is a Republican state representative from Kalispell.