Reps. Boles, Perryman, Roe, Conley lead interim study on funding options for municipalities, roads impacted by energy industry

September 14th, 2020

 OKLAHOMA CITY – Rep. Brad Boles, R-Marlow, led an interim study Wednesday on potential solutions for Oklahoma towns and cities looking for funding options without tax increases to offset the fiscal impact of the energy industry on their infrastructure.

Boles, who chairs the House County and Municipal Government Committee, requested ISH20-070 with Reps. Sherrie Conley, R-Newcastle; Cynthia Roe, R-Lindsay; and David Perryman, D-Chickasha.

Boles prefaced the study with a reminder to attendees that the study is not to examine if the gross production tax (GPT) paid by the energy industry needs to be increased because he believes the industry currently pays in their fair share of taxes to the state. Instead, the study was focused on smaller municipalities that don’t receive GPT taxes for oil and gas but must maintain the roads used by the heavy, high-impact traffic from the industry. Boles said he and his colleagues requested the study to examine the current processes within the state.

“Our municipalities simply don’t have the budget to continually repair roads and bridges that were not designed to withstand heavy traffic and equipment like the oil and gas industry brings in,” Boles said. “We wanted to use this study to learn the financial impact municipalities face to repair this infrastructure before we began looking at a change to the funding formula to allow municipalities to use a portion of the GPT to repair this damage. The whole state benefits from the oil and gas production located in these communities and it’s only fair that our state helps offset some of the costs that these communities have in their infrastructure due to industry activity.”

“This study was necessary to begin the important conversation about how to bring more funding to cities in order to provide safe and well-maintained roadways. Road and bridge maintenance is essential in our small municipalities,” Conley said. “Properly maintained roads and bridges not only allow our families to travel in safety, but keep our products moving and provide an excellent first impression to businesses that may be considering expansion into our rural communities. ”

“Our municipalities must bear the burden of repairing the damaged roads, and we wanted to use this study to look at potentially using a portion of already existing gross production taxes to allow for these necessary road repairs,” Roe said.

“Oklahoma’s abundant oil and gas reserves often produce a mixed bag. Nowhere is that more true than in municipalities that experience high numbers of oil and gas drilling,” Perryman said. “As a result, many towns are required to subsidize the oil and gas industry by using their scant amounts of sales tax revenue to repair damaged roads. This study looked at this issue and considered options that might allow cities and towns to access funds to repair their roads and bridges.”

Wednesday’s interim study heard from representatives from both the energy industry and municipalities, such as Blanchard and Tuttle.

Tuttle Mayor Aaron McLeroy said his city’s roads and bridges were not constructed with the intention of handling oil and gas traffic.

“We have approximately 100 miles of road (in Tuttle) that we have to maintain, and we have a budget of about $200,000 to maintain that amount of road,” McLeroy told the committee. “The last time we looked we were looking at approximately somewhere between $3 million and $5 million to repair our roads just from the damage that oil and gas has caused.”

“We really thank Representatives Boles, Conley, Roe and Perryman for all the hard work they’ve done in putting this study together,” Blanchard Mayor Eddie Odle said. “This help with our roads is much needed for our cities and I hope something develops from this study.”

A video of Wednesday’s interim study can be viewed at https://okhouse.gov/Video/Default.aspx.