Glen Ullin City Councilman Sid White says no sooner did he move to take advantage of a unique way to create sales tax revenue for his city, than the Legislature moved to take it away.
That’s how White perceives the timing of a bill that will be heard Tuesday morning by the Senate Finance and Taxation Committee to remove the ability of home-rule governments to levy their own tax on motor fuels.
White proposed the idea to raise about $15,000 a year for Glen Ullin, based on estimated annual fuel sales in town of 750,000 gallons. He thought a 2-cent tax could help finance street sealing and other infrastructure projects, tapping motorists who use the town but don’t live there, and providing some property tax relief for senior citizens.
But soon after the Bismarck Tribune published a story about the town’s plans, a bill was introduced by Sen. Lonnie Laffen, R-Grand Forks, to remove it from taxable opportunities under home-rule charters.
Laffen said the bill’s timing is no coincidence: Had he not read about the plan when he did, it would have been too late to get the bill in the hopper.
“We didn’t realize that home-rule cities could levy their own fuel tax. We’re not sure if it’s a good idea, or a bad idea, but we want to have a discussion about it,” Laffen said. “The Legislature reserved the gas tax for state roads, and we’re not sure how a home-rule city would use it.”
Laffen said there’s also some concern that the tax would spread like “wildfire,” and suddenly gas stations outside city limits would have a price advantage, or some would move there to remain competitive.
“We’re not sure we want to push all that business outside city limits,” he said.
White said he hopes his testimony at the committee hearing and an appearance by the League of Cities will sway the committee to keep the tax in place.
The Tax Department says no other home-rule government has adopted the tax, though a few have kicked the idea around.
Kathy Strombeck, a State Tax Department research analyst, said the challenge could come in collecting the tax.
“The state has no history of administering local fuels taxes for cities or counties,” she said.
Laffen said he doesn’t expect the committee to vote immediately. The hearing is scheduled at 10 a.m. in the Lewis and Clark Room at the Capitol.