Legislators propose increase in local oil money allocation
North Dakota Senate Majority Leader Rich Wardner, R-Dickinson, and other western North Dakota legislators are proposing two bills to increase allocations of oil tax revenue to maintain and develop infrastructure. One bill would fund oil-producing...
North Dakota Senate Majority Leader Rich Wardner, R-Dickinson, and other western North Dakota legislators are proposing two bills to increase allocations of oil tax revenue to maintain and develop infrastructure.
One bill would fund oil-producing counties “to keep construction going during the 2015 construction season,” according to Wardner. The other would more than double the amount of oil tax revenue received by local governments.
The first bill, referred to as “surge funding,” will take $806 million out of the $1.2 billion estimated to be in the state’s Strategic Investment and Improvement Fund at the end of the year and distribute it to counties, cities and schools in and around the oil patch.
The money would be used for county and city infrastructure, such as sewer lines, water towers, wastewater treatment plants and roads, all of which are facing increasing demand due to the oil boom.
Approximately $300 million would go to the 10 counties that collect $5 million per year in revenue from the state’s oil gross production tax. Another $166 million would go to cities within those 10 counties and $140 million would go to the three “hub cities” - Williston, Dickinson and Minot.
About $35 million would be set aside for schools that lost funding under earlier legislation reallocating money to oil-producing counties.
In addition to the “Big 10” counties, another $165 million is being allocated to other cities and counties. Wardner said this funding is important because these areas are experiencing infrastructure pressure without receiving corresponding funds.
“They’re impacted,” Wardner said. “People are living there. They have stress on the infrastructure, but they’re not getting any oil money.”
Wardner said this bill hasn’t met any real opposition from Democrats. He predicted it would pass and go into effect by February 2015.
“We need to keep things going because the needs are even greater than we thought,” he said.
The funding could also lower housing costs by shifting some infrastructure costs away from land developers, according to its proponents.
“We need workforce,” Wardner said. “If you price them out of their housing, you’ll never get the workforce out there.”
While the surge funding represents a large increase in funding, the proposal also includes a reduction of the Energy Impact Fund from $240 million this biennium to around $150 million for the next.
A second bill, which would go into effect for the 2015-2017 biennium, would change how a percentage of the state’s Gross Production Tax revenue is split between state and local government.
Currently, the tax takes 5 percent of oil revenue and splits it into two revenue streams - a 1 percent stream to certain state programs and a 4 percent stream that is divided between local and state money.
The current division of that 4 percent between local and state is 75 percent to state government and 25 percent to local government, which adds up to local governments receiving approximately 10 percent of the total state oil tax.
Wardner and other legislators are proposing to change the ratio to 40-60 for the 2015-2017 biennium, with the split favoring local government. At a $90 per barrel estimate, this would result in local governments receiving 21.5 percent of the state oil tax money.
Grand Forks gains
Additionally, funding for local road infrastructure would be provided to the rest of the counties in the state, which are also continuing to develop as population increases as the state’s economy grows.
According to estimates, $6,858,023 would be allocated to Grand Forks County, with 88 percent allotted for county roads and 12 percent for township roads.
The city of Grand Forks would also be eligible for another $2 million under the other 1 percent of the Gross Production Tax revenue. Cities with at least 12,000 people and at least 1 percent of their private workers in the oil and gas industry-related jobs are eligible for funding.