Income falls $25 million short for highway department

Revenue for the Montana Department of Transportation is expected to fall $25 million short of budget projections, Director Mike Tooley said Wednesday, possibly placing a handful of statewide highway projects on hold.

“It’s a question of income and expense,” Tooley said. “The Legislature gives us the authority for a certain amount of money to spend. The problem is when the Legislature appropriates budgets, they’re on projected incomes. The tax hasn’t quite matched what they thought it would last session.”

Tooley said the budget took a hit from a drop in trucking fees and state fuel tax revenue, which combine for about 34 percent of the department’s income.

“We didn’t lose all 34 percent, but lost enough to make a dent in the income,” Tooley said.

The department’s annual budget is $711 million, Tooley said, appropriated by the last Montana Legislature.

That $711 million is made up of both state-generated money and federally appropriated funds. About $392 million, or about 55 percent, comes from federal allocations.

To adjust for the $25 million in missing fees and taxes, the department is re-evaluating lower-priority projects on secondary roadways. Projects financed primarily by federal money, such as Kalispell’s U.S. 93 bypass, won’t be affected, Tooley said.

“The project funding [for the bypass] is still secure and solid. It’s not an issue with the project whatsoever,” said Bob Vosen, state construction engineer for Kalispell’s district.

Tooley said the top priority will be given to projects along the interstate highway system, then state highways such as U.S. 93 and U.S. 2, then secondary state roadways. The state highway projects, including chip seals, minor overlays and general maintenance, potentially would be on the chopping block.

The Department of Transportation website lists 48 state project bids that were to be advertised for the upcoming year, starting March 10.

An improvement plan along Montana 206 between Creston and Columbia Falls is a safety-funded project and will not be in line for the chopping block, according to MDT Public Information Officer Lori Ryan. 

The second part to adjusting for the $25 million shortfall involves a temporary hiring freeze for the Montana Department of Transportation. If anyone retires or moves on to a new job, Tooley said, the department won’t fill that position until the budget has recovered. For now, there are no plans to cut staff.

“We need the people we have to manage projects and plow the roads,” Tooley said. “We can’t afford to lose people.”

In last year’s legislative session, Montana lawmakers projected 2016 income of $141 million from gasoline taxes, $72 million from diesel taxes, $27 million from trucking fees and $47 million from third-party contributions.

In February, the department realized the combined income from those sources could be about $25 million short.

The $392 million from the U.S. Department of Transportation is still a projected allocation, but is expected to come in at the full amount.

Tooley said the state highway department doesn’t always reach its projected budget level.

“It rarely does,” he said. “The income will be different or the expenses will be different. Agencies have to operate on their legislative-appropriated funding. We don’t have the ability to generate funds other than taxes and permit fees. We can’t sell things, although that is one thing we’re talking about doing.”

Tooley said department officials have begun discussing the possibility of selling surplus land often found after a larger highway project as a method of boosting the budget. State legislators, not the department, mandate the trucking fees and tax rates, Tooley said.

“We’re stuck on the income side. All we can do is manage expenses,” Tooley said.

Tooley was still optimistic about reaching budget goals with future taxes considering that low gasoline prices may prompt more motorists to visit Montana. In the meantime, Tooley and other department officials will begin defining which projects will be adjusted.

“The big projects aren’t going to stop. We’ll evaluate the small ones and do them as we can,” Tooley said. “We’re going to do what we do. We might just be doing it a little slower due to the cash issue.”

Reporter Seaborn Larson may be reached at 758-4441 or by email at slarson@dailyinterlake.com.