Gas tax increase draws concern from county

With a 4.5 cent per gallon increase to Montana’s fuel tax scheduled to take effect on July 1, local lawmakers are questioning how the additional money will be collected and distributed in Lake County.

“We don’t think it’s a very level playing field,” Lake County Commissioner Gale Decker said last week in reference to a revenue sharing agreement between the state of Montana and the Confederated Salish and Kootenai Tribes.

Under the agreement, taxes on fuel, alcohol and cigarettes are collected by the state and returned to the tribes through a formula based on their number of enrolled members.

Tribes across the state participate in similar revenue sharing structures, which were created to avoid contentious litigation concerning double taxation by both state and tribal governments on reservations.

Intentions aside, county officials have expressed concern regarding whether the money goes toward its intended purpose.

“Not one cent has to be used toward roads and bridges,” Commissioner Bill Barron said.

While state law mandates cities and counties dedicate their portion of gas tax revenue to a road fund, Barron said the tribes’ ordinance includes no such requirement.

According to a recent report from the tribes, however, the CSKT contributed nearly $4 million to road and bridge projects between 2013 and 2015. Roughly $3 million was spent on the South Valley Creek Bridge and the Elmo East 97 project.

Decker acknowledged that the tribes contribute on certain areas, but said that they are often limited by having to adhere to strict federal construction standards.

Moreover, commissioners argue that the tribes receive an uneven amount of money.

A statement posted on the county’s blog last week cited a recent study from the Montana Association of Counties that estimated the gas tax increase will raise about $288 million statewide, with $6,340,000 of that total distributed among the eight tribes in the state and about $6,306,000 split between the 56 counties.

“Hard to believe that the county governments, mandated to maintain roads both on and off reservation lands, get a smaller piece of the pie than the tribal governments,” the post stated.

According to a report prepared by the Montana Legislative Services Division, the CSKT will receive about $585,000 in gas tax revenue during fiscal year 2016. Lake County will take in about $180,000 during the same time period according to figures from the Montana Department of Transportation.

In a letter sent to county officials in April, Andrew Huff, chief legal counsel to Gov. Steve Bullock, explained the disparity as a difference in funding structures. Tribes receive gas tax revenue based on enrollment numbers, while the state distributes money to counties using a three-pronged formula involving population, land area and road mileage.

“Even if the gas tax agreement with the CSKT did not exist, Lake County’s allocation would remain the same,” the letter states.

While prompted by the gas tax increase, which will raise the tax incrementally from 27 to 33 cents per gallon between now and fiscal year 2023, the county’s criticism involves the issue of revenue sharing agreements as a whole. “Maybe (it’s) time to have the legislature take another look at giving the Governor the ability to sign off on these agreements,” Commissioner Decker wrote in a statement posted to the county’s blog last week.

Despite its controversy, the state has defended the practice in the past.

In a 2015 letter to the State-Tribal Interim Relations Committee, Huff explained that agreements were authorized by the state legislature in 1993 due to the “legal uncertainty and economic disarray caused by competing and conflicting state and tribal taxation frameworks.”

“The state-tribal tax agreements have worked very well,” the letter states, adding that the structures have put an end to legal battles and provided businesses relief from double taxation.

Decker said the county understands the legal basis for the agreements, however, they maintain that the proportions are skewed.

“Personally I’m not sure where we go on it,” he said. “We certainly understand that the tribe has the ability to tax within its jurisdiction. But it seems that people off the reservation are paying into this pool.”