Posted 7/29/14 (Tue)
By Neal A. Shipman
For the past two sessions, North Dakota’s state legislators have done a pretty good job of saying that they understand the impacts that the booming oil industry has had on cities and counties in the oil patch. And each and every session, these same legislators promise that they are going to make it right for places, like Watford City and McKenzie County, as well as the other counties and cities that are being slammed by the impacts of the growing oil industry.
And yes, they do send money to the impacted communities and counties. But each and every dollar that is being returned back to these counties and cities is a mere pittance in comparison to the hundreds of millions of tax dollars that are flowing annually into the state’s treasury. Under the current state formula, 75 percent of the state’s oil and gas production tax goes to the state, while 25 percent is supposed to be returned to local governments.
But a funny thing happens when the Legislature, in its infinite wisdom, creates these funding formulas. Words like “caps” and “limits” somehow always seem to find their way into the laws. And for high oil production counties, like McKenzie County, those caps and limits substantially restrict the actual return of those much needed oil and gas tax dollars. In McKenzie County’s case, during 2013, the county sent over $1 billion in just oil and gas production taxes to the state and got back just under seven percent for use by the county, schools, cities and townships. Those “caps” and “limits” literally took millions of dollars away from this county that could have been used to take care of our most pressing needs.
To be fair, the vast majority of North Dakota’s legislators simply don’t understand what is happening in places like McKenzie County and Watford City, which are literally at the epicenter of the oil and gas development. They have nothing to compare to the extent of development that is occurring in the region, the toll that the traffic is taking on our county, city and township roads, or how woefully inadequate our hospital, emergency responders and schools are for the huge increases that they are seeing.
And that says nothing about the huge impacts Watford City is experiencing as it tries to develop its water and sewer systems, its airport, and its arterial roadways to meet a population of 10,000 or more people. Nor does it address the impacts that the county is having when it tries to maintain its road systems due to heavy oilfield traffic, or building a jail facility that can handle 100-plus prisoners.
It is impossible for a legislator in Fargo, Grand Forks or even in Minot, to fully understand what is happening here. Nor can they even begin to comprehend how the needs of the counties and cities being impacted are so great. As Watford City Mayor Brent Sanford has pointed out time and time again whenever he can get an audience with legislators or state leaders, the city received $46 million in state assistance through a variety of oil impact funds in the past two years. But when you realize that the city’s infrastructure needs are $284 million to meet today’s projected population growth, one quickly comes to grips with the problems being faced by local governments in the oil patch.
To help North Dakota’s legislators understand the very unique, and real problems facing oil patch cities and counties, the North Dakota Petroleum Council is bringing 40 of the state’s lawmakers to areas like Watford City and McKenzie County at the end of August.
While a two-day tour is way too short of a time to spend to get a real feel for what is happening here, it should nonetheless be a real eye-opener to these 40 legislators. And opening the eyes to the people who are ultimately going to decide whether or not more money should be flowing back to the oil patch during the upcoming legislative session is the first step in bringing about the formula changes that we need, and deserve.