GRAND FORKS - State Sen. Lonnie Laffen, R-Grand Forks, voted to cut the oil extraction tax by 30 percent last legislative session, a move the North Dakota Tax Department estimated would have cost our state $1.3 billion in the first five years alone.
Laffen denied this in two Herald stories last week. Then he doubled down in a third story by boldly claiming that the “[t]he net-effect of” SB 2336 “was a $39.4 million increase.” He also added that anyone who says otherwise is “flat-out lying.”
Since I was the one who said otherwise, I feel a need to respond. Rather than accusing a colleague of lying, however, I’ll just do my best in the following paragraphs to let Herald readers decide for themselves who is telling the truth.
Let’s start with Laffen’s statement that SB 2336 was about closing a “loophole.” Here’s a reasonable question: Why must a bill, if its purpose is to close a loophole, also contain a permanent, 30 percent cut to the oil extraction tax? It doesn’t, of course.
The only conceivable reason the GOP drafters of SB 2336 included some benign changes to existing law in the bill was to muddy the waters and obfuscate the startling cost of their proposed 30 percent cut to the extraction tax.
Further, if Laffen’s intent was to close a loophole, he had the chance to do so while still opposing the massive cut to the oil extraction tax. He didn’t. Prior to final passage of SB 2336, a roll call vote on the section of the bill containing only the 30 percent cut to the extraction tax was held. On this clean, up-or-down vote to dramatically reduce the oil extraction tax forever, Laffen voted yes.
His vote was cast on Feb. 26, 2013, at 2:43 p.m. It’s recorded on Page 611 of the Senate journal. There is plainly no way Laffen can truthfully deny voting for a 30 percent cut to the oil extraction tax either on final passage of SB 2336 or as a stand-alone matter.
Laffen’s charge that SB 2336 would have increased revenue by $39.4 million also is untrue. In fact, it is amazing how untrue this statement actually is, considering what would have happened had SB 2336 become law.
The oil extraction tax cut set forth in SB 2336 was scheduled to go into effect in 2017 or after North Dakota’s oil production rose to 1 million barrels per day for a three-month period, whichever came first. Daily production reached this level in April and has stayed above 1 million barrels per day ever since.
That means the 30 percent cut to the oil extraction tax would have gone into effect this summer, not 2017. Considering North Dakota collected $175.5 million in oil extraction taxes in August, a 30 percent reduction in this tax would have cost the state nearly $53 million in that month alone.
That’s significantly more - in one solitary month- than Laffen contends the bill would have raised in the entire two-year budget period.
True enough, SB 2336 ultimately was defeated by the House in the face of public pressure. Far from apologizing for getting caught with his hand in the cookie jar, however, it now seems Laffen is trying to say that there were no cookies, and there was no jar.
Laffen and I do agree on one point, though: Significant opportunities are being “driven by the economic resources flowing into our communities and state through the oil industry.” I just can’t figure out why Laffen would vote to squander those opportunities.
Had SB 2336 not been walked back, Laffen’s vote would have meant tens of millions of dollars less per month to fix rutted roads in the near term, hundreds of millions of dollars less in the approaching biennia to fund education and provide deeper property tax relief, and billions of dollars less to invest in future generations of North Dakotans.
That’s the “flat-out” truth.
Schneider, a Democrat, represents District 42 and is the minority leader in the North Dakota Senate.