MINOT, N.D. – The state’s oil-producing counties are building a united front to change how oil tax revenue is distributed so they can better keep up with rapid growth.
Members of the North Dakota Association of Oil and Gas Producing Counties discussed new ways of allocating that money during their annual meeting Thursday in Minot.
“Our ultimate goal is to go into the legislative session in January with one voice with our western leaders and legislators to get our needs addressed and funded,” said Dan Brosz, president of the group, which represents 19 counties that have oil, gas or leasing development.
The oil and gas industry pays a 5 percent gross production tax to the state in lieu of property taxes. A portion of that goes back to counties, cities and schools affected by the development, but western North Dakota leaders say it’s not enough to support growing schools, taxed law enforcement agencies and infrastructure needs.
“We needed this money yesterday,” said Rep. Shirley Meyer, D-Dickinson. “If we don’t get our infrastructure shored up, this thing will crash.”
Brosz, of Bowman, said the $135 million designated for energy impact grants have helped communities, but those dollars are one-time grants and don’t allow local officials the ability to budget for the future.
Vicky Steiner, executive director of the organization, said if western communities don’t get their share of oil tax revenue, residents will be forced to pay higher taxes to support the growth.
“We don’t want to see the burden rise on the taxpayers in the west,” said Steiner, who also is a Republican legislator from Dickinson.
An analysis by Headwaters Economics showed that North Dakota stands out among its peers for providing the least direct funding for oil-impacted communities. North Dakota governments received directly 8 percent of the total state revenue from oil and natural gas in fiscal year 2011, and about 11 percent for 2012-13, the report said.
The association is proposing changes to a complex distribution formula to give those communities a greater share.
The four counties with the most oil production now receive 10 percent of the gross production tax, while 90 percent goes to the state. The association proposes to divide the revenue 50-50 for those counties.
The group also proposes other changes to the formula, including removing a cap on school funding and treating the hub cities of Williston, Dickinson and Minot differently to allow smaller communities in those counties to get more funding.
But Meyer questioned why the counties, which have been struggling to keep up for four years, don’t ask for more.
Meyer is drafting legislation to send 100 percent of the gross production tax revenue back to oil-producing counties after all constitutional obligations are met. The bill will include a sunset clause after two years, and the counties would not have a time limit to spend the money, she said.
“I want them to think big and bold,” Meyer said. “It always seems to me like we’re apologetic to ask for anything.”
The association also proposes increasing the dollars in the energy impact grant fund to a minimum of
Mountrail County Commissioner David Hynek said he’d like to see more than $150 million in that fund, although not at the expense of changing the tax revenue formula.
Earlier Thursday, Lance Gaebe, director of the Energy Infrastructure and Impact Office, estimated his office received about
$700 million in requests to the grant fund that did not receive funding.
“Those unfunded requests, of which 95 percent are valid, they don’t go away,” Hynek said.