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Economy & Business

One Montana Town Finds Itself Buckling Beneath The Oil Boom


The economy of eastern Montana is surging and oil and gas development is the driver. Last year alone, the oil industry brought in $200 million in tax revenue to state and local governments. Unemployment in counties near the oil fields is well below the state average. This week, we're reporting on effects of the fracking boom in the region known as the Bakken. And today, Montana Public Radio's Dan Boyce tells us that that activity comes with a cost.

DAN BOYCE, BYLINE: Sunny's Family Restaurant, a cozy, corner diner in the heart of Sidney, Montana.

UNIDENTIFIED WOMAN #1: Oh, my God, look.

BOYCE: Customers are reacting to an extra jolt on top of their morning coffee...

UNIDENTIFIED WOMAN #2: He just hit the corner of the building.

BOYCE: ...because a truck driver just took a turn too sharp and dragged the side of his trailer across the diner's awning, ripping a gaping hole in the trailer.

UNIDENTIFIED MAN: He jackknifed.

BOYCE: The young driver's now got the truck stuck in the middle of the intersection. He's moving it back and forth, trying to get going again. This whole scene is sort of a miniature expression of what's happening here. Small towns are feeling some of the biggest impacts from the boom. Truck traffic down Sidney's Central Avenue is almost constant, big rigs taking equipment to the oil fields, others carting the oil off to market.

MAYOR BRET SMELSER: We see these (unintelligible) every day, day after day after day.

BOYCE: That's outgoing Sidney Mayor Bret Smelser. He's been in the post for the last 12 years. He's standing out on the sidewalk by Central Avenue.

SMELSER: Are you getting cold yet?


BOYCE: It's a few degrees below zero. Passing semis leave heavy clouds of white exhaust. Smelser says traffic is up as much as 50 percent in the last five or six years, pounding local roads into gravel. And it's not just the roads.

TOM FLATLEY: So this is the project. It's 140 acres. This is Sunrise...

BOYCE: That's real estate developer Tom Flatley at the office of a nearby construction site. He and a colleague are leaning over a colorful scale model of Sunrise Village.

FLATLEY: This is the largest subdivision that's ever been built in the city.

BOYCE: They'll be building nearly 100 single-family homes in the next year. All this new housing and new hotels for the waves of oil industry workers or for the other people supporting them, all of this new construction is straining the city's sewer system to its limit. Mayor Smelser says Sidney brings in about $10 million a year from sources like local property taxes and fees. But Smelser says it has $55 million in infrastructure needs right now.

SMELSER: We do need some help out here. The people in Sidney have suffered enough. We've raised their water and sewer rates. We doubled their water and sewer hookup fees. We've initiated impact fees.

BOYCE: The oil industry, in one way or another, is largely responsible for all of this. But Smelser is not looking to the oil companies for more help. He believes the taxes they pay make sense and the companies give to the community in other ways, like to the local Boys and Girls Club. He's looking squarely at state government and he's not looking happy.

SMELSER: It aggravates me. It's a betrayal.

BOYCE: He's talking about a bill which passed the Montana legislature with huge majorities. It would have provided about $35 million from the state's surplus to eastern Montana oil boomtowns for their infrastructure. Democratic Governor Steve Bullock vetoed it. He says the state couldn't afford it.

GOVERNOR STEVE BULLOCK: At the end of the day, if the legislature blows the budget, they leave town for two years. I'm the one that has to manage it.

BOYCE: Bullock points out the state has invested $68 million in loans or grants for eastern Montana infrastructure since he took office early last year.

BULLOCK: That's new money from roads and bridges to water systems and other things.

BOYCE: The governor says he's actively looking for more ways to address the issue. Back on Sidney's Central Avenue, Mayor Smelser points to another passing truck.

SMELSER: One of our city crew, collecting twice as much garbage as we did two years ago.

BOYCE: In order to help pay for hauling that stuff away, Mayor Smelser also hopes to change how oil and gas production taxes are distributed in Montana.

SMELSER: The state keeps 52 percent, counties get 25 and the school districts get 20 something.

BOYCE: But cities like Sidney in eastern Montana only get about one percent of those funds, and that's not enough to pave the roads, to install the sewers and to take out the trash.

Back at Sunny's Family restaurant, that young truck driver has pulled his damaged semi out of the jackknife. He comes into restaurant, joking he's had better days. Most of the customers have turned back to their coffee. A Sidney police officer outside looks at the damage to the building. He says, last time, it was the movie theatre. For NPR News, I'm Dan Boyce.

SIEGEL: Our Oil Rush series continues on MORNING EDITION with a look at the challenges of commuting 600 miles to work in the oil fields. Transcript provided by NPR, Copyright NPR.