The message Wednesday at the Montana State Capitol in Helena was that it’s time for oil and gas companies to pay their fair share of taxes instead of getting a free ride on most of their production.
At a press conference sponsored by the Northern Plains Resource Council, Senator Christine Kaufmann (D-Helena) outlined her Senate Bill 295, which would repeal the tax-free holiday Montana gives oil and gas companies on the first 12 to 18 months of production. A typical Bakken formation well yields 57% of its production in the first 18 months, but the current tax holiday means that most of the production from each well is never taxed in Montana.
“It’s time to bring the oil companies home from their holiday,” said Kaufmann to several dozen Northern Plains members and other supporters. “From 2008 to 2012, the tax holiday cost the state and counties $152 million. Our impacted towns and cities have lost another $73 million during this period.”
Kaufmann’s SB 295 would capture the revenue from oil and gas taxes into two funds. The first would immediately go to alleviate demands on local infrastructure from the Bakken oil boom such as roads, sewers, housing, the proliferation of man-camps, police and fire services, and schools. The rest would establish a permanent renewable resources trust fund to promote renewable resources such as solar, wind, and geothermal, and also would preserve wildlife habitat for hunting and fishing.
“It takes cities and towns in the affected region two years before they can collect money from oil and gas taxes,” Kaufmann said. “And only one-tenth of 1 percent goes to the municipalities.”
“Of course these corporations will fly their executives in their private planes to Helena to tell us why they just can’t make it without the tax breaks, and that they might take their business elsewhere. But it’s not about the taxes they pay – oil companies will go where the oil is. Montana has a lower tax on oil and gas than both Wyoming and North Dakota. Are they just going to pick up and move to North Dakota? If they want Montana oil, they will come here whether there is a tax holiday or not.”
Deborah Hanson, a longtime Miles City resident and member of Northern Plains, told the press conference about conditions in eastern Montana communities. “Local governments need the money and they needed it four years ago,” Hanson said. “In some towns, friends no longer socialize after work because of the influx of new people and traffic. Women are afraid to go out alone. Their home towns no longer seem like home. Our communities need tax fairness to deal with this exploding growth. Just as we Montanans pay our fair share in taxes, it’s time oil and gas companies do, too.”
The Rev. Cathy Barker, a United Church of Christ pastor in Helena said it is important that money for Bakken communities does not rob social programs funded by the state general fund.
“We need to fund infrastructure and social programs, but through a system that is fair and just for all Montana taxpayers,” Barker said.
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