Yesterday’s post was about infrastructure, roads and taxes. The basic argument was:
- Infrastructure costs go up as oil and gas drilling expands.
- Because the benefits or drilling — corporate profits, jobs, increase in the supply of oil — are distributed and the infrastructure costs are local, it is rational for the State to help local communities pay for the infrastructure cost increase.
- The State of Montana is not rational. Despite having a 9% oil tax on the books, it gives almost all of it away in a tax “holiday.” As a result, local communities are stuck paying the infrastructure cost increase.
- The local community means you. Your taxes are going to go up to pay for it.
There’s a way to determine if these arguments are true. We can head up to Sidney, which is at the center of the Montana portion of the Bakken, to see what has taken place there since the oil boom started.
I found a Montana Public Radio piece from late last year that included an interview with Bret Smelser, the Mayor of Sidney at the time. At that point there had been expanding oil development for about five years.
You can listen to the interview yourself by clicking the audio player at the bottom of the page, but here’s what I learned from it:
- Traffic is up as much as 50 percent in the last five or six years, “pounding local roads into gravel.”
- New hotels and housing are straining the city’s sewer system to its limit.
- The town brings in about $10 million dollars a year in taxes, but it has $55 million dollars in infrastructure needs.
According to the report, Smelser wanted help from Helena, but it didn’t come. He was particularly upset because Governor Bullock vetoed a bill that would have provided $35 million to eastern Montana to pay for increased infrastructure costs. Bullock said he vetoed it because he had to cut $150 million of “spending or tax cuts to balance the budget.” (By “tax cuts” he could mean the Oil and Gas Tax Holiday. Wouldn’t want the corporations to suffer. Just the people of Sidney.)
So how has Smelser balanced the budget? Listen for yourself:
- raised water rates
- raised sewer rates
- raised sewer hookup fees
- initiated impact fees
So, looking back to yesterday’s post, when oil drilling expands:
- Infrastructure costs go up. Check.
- The State of Montana does not provide adequate resources to local government to meet its infrastructure needs. Check.
- Local citizens pay the cost while big oil and gas companies get a free gift of a tax break that should pay for the mess they’ve created. Check.
Is this how you want to be represented in Helena? You and your elected county commissioner should work together to get this changed. It’s just not fair.
It’s interesting to note in the audio segment that “Smelser isn’t looking to the oil companies for more help. He believes the taxes they pay make sense and the companies give to the community in other ways–like to the local Boys and Girls Club.” (I am not making this up.)
Of course he doesn’t want to reinstate the Oil and Gas Tax. This is the same Bret Smelser who was appointed by the Governor to sit on the Montana Board of Oil and Gas Conservation (BOGC). The one who showed open disdain for members of our community who spoke before the BOGC asking for protection in the Belfry well permit. Yes, the one who felt compelled to lecture our neighbors that they just need to make some sacrifices in the name of American energy independence. The same one who’s been able to expand Border Steel and Recycling, his family business, to Plentywood, Sidney and Williston, thanks to the Bakken oil boom. And then is responsible for regulating the oil corporations. Could he have designs on a Red Lodge location next?
Listen to the Montana Public Radio report here:
Next week we’ll look at a proposal to restructure the Oil and Gas Tax in a way that provides a real incentive to corporations in tough times and requires them to pay when their profits are high.