Western N.D. Opposes ‘Takings’ Of Oil Tax Revenue

BISMARCK – Western North Dakota communities are fighting what they consider a money grab for a portion of oil tax revenue.

Townships in the top nine oil-producing counties were set to share about $25 million in gross production tax revenue for 2017-19 through Senate Bill 2013.

An amendment approved by the House diverts $16 million of that funding and sends it to townships across the state.

“It is a takings,” said Senate Majority Leader Rich Wardner, R-Dickinson.

The gross production tax, which is collected in lieu of property taxes on oil and gas development, is the source of revenue communities use to offset impacts of oil development.

Geoff Simon, executive director of the Western Dakota Energy Association, said townships and counties rely on that funding to maintain roads heavily traveled by the oil industry.

In McKenzie County, the state’s top oil-producing county, the road budget is projected to be $64.5 million in 2017, compared to about $8 million in 2010.

“These aren’t your average farm and ranch roads. They’re industrial roads,” Simon said. “They need every penny they can get to keep up.”

Halliburton oil trucks drive near the company’s yard in Williston, N.D., on April 30, 2016. REUTERS/Andrew Cullen

But townships in other areas of the state have infrastructure needs, too, said Rep. Mike Brandenburg, R-Edgeley, a member of the House Appropriations Committee.

Under the original bill, townships in the oil counties were projected to receive an average of about $56,000 for 2017-19.

With the amendment, townships in oil counties are projected to receive an average of $20,000, while townships in non oil-producing counties would receive an average of $10,000. Where there aren’t organized townships, the funding would go to the county.

“We’re trying to find a fair way to do this,” Brandenburg said.

How the state distributes oil tax revenue is a common topic of debate at the state Legislature, with western communities making the case in recent sessions that they need more funding to keep up.

The North Dakota Petroleum Council is “adamantly opposed” to the amendment and is advocating for a greater portion of the revenue to go back to communities with the greatest impact, said President Ron Ness.

A conference committee of House and Senate members is working to resolve their differences on the bill.

Other amendments to the bill also reduce funding for the Bakken “hub cities” of Dickinson, Williston and Minot, which have heavy debt loads after funding major projects such as wastewater treatment plants to keep up with growth spurred by oil development. School districts in those hub cities also would see a funding reduction under the amendment.

The bill includes $35 million for a new Williston airport and $5 million for the Dickinson airport.