BISMARCK - Backed by rosy oil tax figures, North Dakota Republican lawmakers unveiled a $280 million plan to fund infrastructure projects outside of the state's Oil Patch Thursday, July 26.
The proposal would add three "buckets" to the existing oil tax distribution structure. A $115 million pool would be dedicated to infrastructure in cities and another one would be set aside for counties and townships, while airports would have a $50 million bucket.
"The Legislature has supported the buildout of the infrastructure out west during the boom times," said Rep. Mike Nathe, R-Bismarck. "Now is the time to start funding for the infrastructure for the rest of the state."
The lawmakers, led by Senate Majority Leader Rich Wardner of Dickinson, revealed the plan during a news conference at the state Capitol almost five months before the start of the 2019 session. Wardner warned the money is intended for basic needs such as roads and sewers rather than “feel good” projects like swimming pools.
“We want to help these communities so they don’t have to go to the taxpayer with special assessments, so they don’t have to go to the taxpayer to raise taxes to take care of their infrastructure,” he said.
The legislators didn’t have a bill draft available, but a news release said funding to oil and gas producing counties and so-called “hub cities” would continue. Geoff Simon, executive director of the Western Dakota Energy Association, which represents political subdivisions in western North Dakota, called the proposal an “appropriate” way to help communities outside the Oil Patch.
“They’ve honestly had some impacts from the oil industry as well,” he said.
Oil and gas tax collections have remained well ahead of previous forecasts during this two-year budget cycle, thanks to better-than-expected oil production and prices.
The plan released Thursday assumes oil prices of $52.50 per barrel and production of 1.2 million barrels per day, which Wardner called “conservative.”
Prices were about $12 ahead of that target Thursday and oil production hit a record 1.24 million barrels per day in May.
North Dakota Democrats warned the plan would "put local infrastructure projects at the mercy of oil prices."
Under the plan, Fargo, Bismarck and West Fargo would receive an estimated $25.4 million, $16.1 million and $12.5 million, respectively, and Grand Forks would follow at $12 million. A city’s allocation would depend on population, population growth and taxable valuation changes.
During a second news conference Thursday, Fargo Mayor Tim Mahoney called the idea a “huge game-changer.” West Fargo Mayor Bernie Dardis said rapid growth in his city has put “overwhelming” pressure on its infrastructure.
Gov. Doug Burgum’s office was still analyzing the proposal Thursday morning but he commended lawmakers for “proposing a plan that addresses critical infrastructure needs across our entire state for the long-term benefit of our citizens, while also still maintaining funding for hub cities in the oil patch.” The Republican governor is eyeing budget cuts for the next biennium, but his statement noted the plan doesn’t add money to the state’s general fund.
Separately, the lawmakers also floated tapping earnings from the state's massive voter-approved Legacy Fund for infrastructure. Legislators were unable to spend the fund’s principal and earnings until July 2017.
Wardner said lawmakers are more willing to use Legacy Fund earnings than its principal, which totaled more than $4.8 billion at the end of May.