Contingency proposal could boost oil-impacted communities’ share to 40% of the oil production tax and provide an additional $40 million to non-oil producing counties
(BISMARCK, N.D.) – House Minority Leader Kenton Onstad and Senate Assistant Minority Leader Joan Heckaman today discussed their efforts to provide an increased share of oil revenue to oil-impacted communities and non-oil producing counties if certain contingencies materialize.
The proposal, which the legislators’ are seeking to enact as an amendment to HB 1176, would allocate 40 percent of the production tax to oil-impacted communities during the second half of the 2015-2017 biennium if daily average oil production reaches 1.2 million barrels per day in February of 2016. The initiative would also provide approximately $40 million in additional funds to address infrastructure needs in non-oil producing counties throughout the state.
“If the past has taught us anything, it’s that we’ve consistently undershot the mark when it comes to addressing oil impacts,” said Representative Onstad. “That underestimation was the reason we had to appropriate a $1.1 billion ‘surge’ bill just to catch up with the needs in western North Dakota. Even at a time when oil prices have dropped, it’s really about providing a fair share of what oil tax revenue there is to western North Dakota and counties across the entire state.”
Dem-NPL legislators have long-advocated for providing an increased share of the oil production tax to western North Dakota in order to address the challenges that have accompanied the rapid development of the state’s natural resources. Onstad, for instance, was the prime sponsor HB 1318 during the 2013 session, which would have kept 80 percent of the oil production tax in oil-impacted political subdivisions for the 2013-2015 biennium to address oil impacts as they arose. The Tax Department estimates sharing oil production revenue in that manner would have resulted in approximately $1.797 billion more in real-time funding for oil impacted communities during the 2013 biennium.
Prior to the 2014 election, GOP legislators indicated support for changing the local-state share of the production tax to a 60 percent – 40 percent split. However, HB 1176, which deals with the production tax formula, would set the local share at only 30 percent of production tax collections in its current form.
Heckaman emphasized that the Dem-NPL proposal recognizes economic realities, but would provide a meaningful increase in funding to meet infrastructure needs in the event that oil production remains strong.
“This is a true contingency plan,” said Heckaman. “If production is high, leading to significant impacts, this increased share of the production tax will kick in for western North Dakota and other non-oil producing counties with needs. On the other hand, if production stays below 1.2 million barrels per day, there is no possibility that this proposal could negatively impact our budget.”
While the Senate Appropriations Committee rejected attempts by Dem-NPL Senator David O’Connell and Heckaman to amend HB 1176 to include the oil revenue sharing proposal when the bill was heard in committee this week, the legislators announced they would offer a floor amendment to HB 1176 when the legislation is considered by the full Senate on Monday.
“The importance of this issue merits a vote by the full Senate,” added Senate Minority Leader Mac Schneider, D-Grand Forks, who will offer the floor amendment.
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