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Montana SB 442 funding formula is not fair

by By DAN SALOMON District 47 State Senator
| March 15, 2024 7:00 AM

For the last 14 years, I have had the honor of serving as a member of the Montana Legislature. In each session, the Legislature has passed bills which the Governor has vetoed.

While many members of the Legislature find vetoes frustrating, a vote to override a veto is an opportunity for the Legislature to reconsider its decision and take a second look at a bill. In the last session, the Governor vetoed SB 442 and now the Legislature will have the opportunity to consider whether to override the veto. 

After having the chance to examine the bill again along with recent calculations from the Montana Department of Revenue, I have concluded the Governor is right, SB 442 as written, is poor public policy and should not be enacted into law.

On its face, Senate Bill 442 is something I would normally support. SB 442 takes marijuana tax proceeds and allocates the tax revenue for county road maintenance, habitat management and veterans services. However, like any bill, the devil is in the details. 

In the case of SB 442, the mechanism for allocating county road maintenance funding is inequitable and fundamentally unfair to the vast majority of Montanans.

Under SB 442, county road maintenance funds are allocated based upon a formula which is primarily driven by the number of rural road miles. The formula does not consider the amount of marijuana taxes collected in a county, the population of the county, or the amount of traffic on a road. 

A consequence of using this method of allocation would be that some counties would receive a disproportionate share of the tax proceeds.

In 2023, Yellowstone County, Montana’s largest county by population, paid $8.6 million dollars in marijuana taxes. Under SB 442, Yellowstone County will receive $210,057 in marijuana tax revenue for road maintenance. In contrast, Phillips County, the 38th largest county by population, which did not pay any marijuana tax, will receive at least $237,832 in marijuana tax revenue for road maintenance. 

Does that sound fair to you?

Also in 2023, Lewis and Clark County, the sixth largest county by population, paid $3.4 million dollars in marijuana taxes. Under SB 442, Lewis and Clark County will receive $196,074 in marijuana tax revenue for road maintenance. On the other hand, Sheridan County, the 39th largest county by population, will receive an almost identical amount ($196,834), even though Sheridan County only paid $159,765 in marijuana taxes.

No county is treated worse than Silver Bow County. In 2023, Silver Bow County, with a population of approximately 35,000 people, paid $2.3 million in marijuana taxes. Under SB 442, Silver Bow County will only receive $55,478 in marijuana tax revenue. Only one county will receive less. In contrast, Garfield County, with a population under 1,000 people, will get nearly three times as much ($163,091) in marijuana revenue. 

There are 20 counties which do not collect any marijuana tax revenue, which get more than Silver Bow County.

As these figures show, the funding formula in SB 442 is unfair. If the Legislature wants to allocate marijuana tax revenue for county road maintenance, it should go back to the drawing board and come up with a formula that is fair and equitable for all Montana counties. 

There is no reason to shove through a bill which benefits some counties at the expense of others. The Legislature can do better in 2025. Thus, the Governor’s veto of SB 442 should be sustained.

- Montana State Senator Dan Salomon, District 47