Montana Gas Tax Increases Go Into Effect

Montana Public Radio | By Corin Cates-Carney

Published July 3, 2017 at 2:32 PM MDT

A proposed 2 cent local option gas tax would fund road maintenance in Missoula.

Gas and diesel prices ticked up over the weekend as a new state tax went into effect. The new tax will increase every July 1 for the next six years, to fund maintenance on bridges and roads across the state.

Montana’s gas tax increased by four and a half cents cents over the weekend. Diesel increased by a cent and a half.

The tax increase was approved by state lawmakers after Democrats and Republicans reached a compromise on adding six cents to the state’s existing gas tax by 2023, after an initial proposal for an eight cent increase.

Larry Flynn, an administrator with the Montana Department of Transportation, says the tax is expected to bring in an additional $29 million this year, more than half of which will go to cities and counties for local road-related construction.

He says funding road and bridge projects through a gas tax is becoming more challenging as cars become more fuel efficient.

"The real challenge that we have is as fuel economy increases with the introduction with hybrid cars and electric cars, when we are taxing a gallon of gas, it makes it very challenging on a go forward basis to fund our infrastructure needs."

Flynn says in about four years inflation and vehicle technology will catch up to the money brought in by the new gas tax, again creating a need for more money to keep up with the state's roadway infrastructure needs.