Business groups and airport executives lined up Wednesday in support of a proposal to create a $2 million state grant program that would help fund efforts to incentivize airlines to expand service in Montana.
The House Transportation Committee’s hearing on House Bill 408 drew opposition from representatives of the state’s car-rental agencies, however, as the new grant program would be funded entirely by the industry.
Sponsored by Rep. Steve Lavin, R-Kalispell, the measure would increase the current 4 percent sales tax on car rentals in Montana to 5 percent, and use the additional revenue to fund efforts by local airport authorities, chambers of commerce and other business development groups to incentivize expansions in air service.
Kalispell Chamber of Commerce Executive Director Joe Unterreiner spoke in support of the bill, noting the record-breaking visitation to Glacier National Park in 2016, which accompanied a record year for Glacier Park International Airport near Kalispell.
“Tourism is a huge boost and a rapidly growing segment of our economy,” Unterreiner told the committee. “Non-resident spending of groups coming into Montana by air is $800 more per trip than groups coming into Montana by all means.”
Several airport representatives also praised Lavin’s bill, arguing that convincing airlines to begin or expand service has become increasingly competitive in recent years. Scott Humphrey, with the Bozeman-Yellowstone International Airport, said that two airlines have recently added flights, but noted that each effort cost more than $1.5 million in local and federal incentives.
“Without these grants, we would not have gotten our foot in the door, we would not have positioned ourselves in a place where they would have considered serving a community such as ours,” he said.
Enterprise Rent-a-Car representative Riley Johnson, however, called the proposal a subsidy that amounted to “a simple industry enhancing a much broader industry.”
“The rental car industry is bearing the whole burden because it’s easy money, and it’s an established system. I submit this is unfair to the whole industry of rental cars,” Johnson said. “You’re not looking at hotels, motels and lodging. You’re not looking at campgrounds.”
He also said some of types of eligible grants outlined in the bill seemed far afield from the aim of expanding services. He specifically pointed to language allowing grants to be spent on “subsidizing the cost of ground handling and subsidizing fuel costs.”
Grant funding would also be eligible to pay for minimum revenue guarantees for airlines, marketing and matches for federal grants. It would be administered by the state Department of Transportation.
Johnson also said that 70 percent of his customers are Montana residents, and only four of his company’s 12 locations in Montana are in airports.
Lavin responded in his closing argument that Johnson would still benefit from more air travelers renting cars from his business and added that the tax amounts to a “pass-through” fee to consumers, not the rental agencies.
“Tourism and business. That’s what this thing’s all about,” Lavin said. “The economic impact of this bill is going to be huge, I think, in the long run.”
Sam Wilson can be reached at 758-4407 or firstname.lastname@example.org.