ROB LINDBERG & DARYL DUKART: Help the Bakken region so it can help North Dakota
DICKINSON, N.D. — Efforts to approve surge and long-term funding for western North Dakota are necessary and welcome commitments to help the development of the region, which hosts the industry that has driven economic growth and created jobs throughout North Dakota.
That western North Dakota needs this investment is well known. But why it is necessary is not as well understood.
Three factors create this necessity.
- First, decades ago, North Dakota voted to end local taxation on the oil-and-gas industry in favor of the gross extraction tax. This creates a situation where local entities are disadvantaged, compared with a typical city that builds taxable property for both industry and residential properties.
- Second, the pace of growth in the Bakken has left formerly small communities without the ability to raise funds through bonding in amounts great enough to meet their growth. Creditors are comfortable providing for normal paces of growth, but not the doubling or tripling some communities have achieved in only a few short years.
- Third, while the industry brings far more benefit than otherwise, it does impact local infrastructure and roads with significant cost to these localities.
It’s only fair that money generated from a highly taxed industry be returned to the communities most impacted.
Throughout these discussions, funding challenges are communicated in terms of large, multi-million or even billion dollar figures. But the basis of western funding needs is not the size of the dollar amounts; it is the need to build communities that have the quality of life we expect in our state.
Every North Dakota family, new or native, deserves to drive on safe roads, buy or rent affordable housing and enjoy the standard amenities of healthy communities.
Unfortunately, we are approaching a critical point in the development of western North Dakota when the policies we set in place determine whether this region permanently establishes a transient and short-term employment base or builds the needed infrastructure, including homes, to attract a committed workforce and their families.
The tools to do this are straightforward and include approving an immediate, one-time funding bill in January and modifying the current mechanism for sharing gross production taxes with the state and counties.
This tax collects 5 percent of the value of each barrel and is currently allocated 75 percent to the state and 25 percent to the counties. The new proposal would change the formula to a split of 60/40, with 60 percent being allocated to the counties to share among the local entities within it.
It would not impact any allocations of the extraction tax, which is set at 6.5 percent of the value of each barrel.
These changes will give stability to funding sources while meeting the timelines of the upcoming 2015 construction cycle.
Investing in the needs of western North Dakota is important to the entire economy of our state. The economic reach of the oil industry extends to every North Dakota community, and we must ensure that it stays healthy for decades to come.
Supporting the growth of Bakken communities helps ensure we attract top talent across the state and that the industry continues to be an important driver of technology, manufacturing, contracting and engineering firms in eastern North Dakota.
The need to reinvest a portion of the revenues generated by western North Dakota into the communities within it is clear. These funds ensure the communities have the resources to grow, families choose to move to the Bakken, and the oil industry’s success can continue to drive North Dakota’s whole economy forward.
We hope that Herald readers will support the needs of the region’s growth.
Lindberg is director of Bakken Backers, a coalition of businesses, leaders, workers and residents who support the Bakken and its benefit to North Dakota.
Dukart, a Dunn County, N.D., commissioner, is chairman of Vision West ND, a 19-county planning effort encompassing areas of North Dakota that are affected by oil and gas production.