Innovation of Montana’s engineering firms is at risk

From the breathtaking expanse of Glacier National Park to the community fabric of Bozeman and Billings, Montana’s engineering firms play a vital role in building and maintaining our roads, ensuring our air and water are clean, and developing new technologies and products that make our lives safer and more efficient.

As CEO of WGM Group Inc., a Montana-based planning and engineering firm, I understand this firsthand. We’ve been enhancing Montana communities for over 50 years thanks to our passion for solving complex engineering, planning and design challenges to better our communities. I am proud of our growth; we are now a company of 115 people with strong Montana roots from Missoula to the Flathead and Gallatin River Valleys.

But that continued growth is under threat in the form of a little-known tax change that disproportionately affects small businesses, including engineering firms, across the country.

Until recently, companies could deduct research and development (R&D) expenses in the very same year they occur. This allows for significant investment in innovation, particularly in R&D-heavy industries like engineering. It’s a financial lifeline that allowed us to manage cash flow, reinvest in our business and take on the kind of ambitious projects that have distinguished us in a competitive industry.

For years, we’ve had comfort in knowing that the significant investments we made in the R&D space would not threaten operational costs or essential outlays like administration and payroll. But starting last year, that deduction was changed, forcing companies to spread those costs over five years, rather than the usual same-year timeline.

We see the writing on the wall. If this new policy isn’t fixed it will place an unexpected and unwieldy tax burden on our shoulders, forcing us to re-evaluate the feasibility of new R&D initiatives to the detriment of our company, our employees, and the communities we serve.

It is clear that something must change now. We need tax policy that allows us to remain agile, innovative, and competitive — one that fosters, rather than hampers, our ability to bring groundbreaking solutions to the public. Fortunately, legislative efforts are underway in both the House and Senate to curtail the negative effects of this tax change, putting the focus back where it should be – on strengthening communities for resilient futures through insightful design.

When the choice is between keeping the lights on and pursuing a groundbreaking idea, the lights must stay on—but it doesn’t have to be this way. On behalf of WGM Group and other engineering enterprises across the state, I urge all of Montana’s Congressional delegation to support legislation that fixes this mistake in the tax code and let our engineers get back to building our country.

Melissa Matassa-Stone, PE, LEED AP, is the CEO of WGM Group, Inc., and holds a master’s degree in project engineering and management. Before joining WGM’s executive team, she spent years leading the company’s environmental division. She currently serves as a board member for the American Council of Engineering Companies of Montana, and Climate Smart Missoula.