Legislation to gradually increase Montana’s motor fuel tax was approved by the legislature on April 22 and sent to Gov. Steve Bullock’s (D) desk for final approval. Accompanied by bills that include a new electric vehicle fee, a 3 percent increase on vehicle registrations and a new tax on vehicles worth over $150,000, the measures are expected to generate over $40 million annually.
House Bill (HB) 473 will gradually increase the state gas tax by 6 cents-per-gallon, with a 4.5-cent increase on July 1 and the remaining amount phased in annually by 2023. A state special fuel tax increase of 2 cents-per-gallon will be phased in during the same time period.
Companion measure HB 650 will also impose a 3 percent administrative fee for Department of Motor Vehicle transactions (which would increase to 9.6 percent if Gov. Bullock does not approve HB 473) and a new tax on light vehicles and motor homes valued at over $150,000 – a 1 percent fee on vehicles’ market sale retail price if less than a year old, 0.9 percent if the vehicle is between one to two years old, and 0.8 percent if the vehicle is two to three years old.
Additionally, HB 205 imposes a $95 annual registration fee for electric vehicles, as well as increases motor fuel tax rates on compressed natural gas (CNG) and liquefied petroleum gas (LPG) to rates comparable to the state gasoline and diesel tax rates.
The motor fuel tax increase is expected to generate $31.6 million annually in new road funding, with an estimated $9 million additional revenue generated by the fees in HB 650 and HB 205.
HB 473 originally proposed an 8 cents-per-gallon gas tax increase. The original version was approved by the House with a vote of 54-46 on March 29. The Senate amended the bill to lower the gas tax increase and returned it to the House on April 13 with a vote of 28-22. The House approved the measure with bipartisan support 57-43 on April 22 and sent it to Gov. Bullock. The governor had supported the original bill, but has made no statements on its amended form.
If Gov. Bullock approves HB 473, this will be the first state gas tax increase since 1994.
Montana is the third state to legislatively increase its gas tax in 2017, and the 20th state since 2013. Read ARTBA-TIAC’s case studies for details on previous state gas tax increases, and visit the ‘State Legislation’ page for information on what other states are doing in 2017 to increase transportation funding. Follow the links below for information on the other state gas tax increases approved by legislatures in 2017.
Update: Gov. Bullock signed into law HB 473 and HB 650 on May 11, but vetoed HB 205.