February 6, 2013

Bills look at putting more money into oil patch cities, counties

By Kate Ruggles
Farmer Staff Writer

Three bills are being introduced in the 63rd Legislative Session that could greatly change the formula of oil and gas production taxes that are returned to impacted western North Dakota counties.
One in particular has the attention of many western legislators according to Rep. David Drovdal, including himself.
House Bill 1358 is the one that Drovdal states many western legislators are pushing, though any of the three would give western North Dakota communities more money than they have been getting.
So what makes this one stand out above the rest?
All three bills could give oil-impacted counties more than twice the oil tax revenues they now receive under the current formula.
Under the current formula, local governments in western North Dakota receive $140 million, and McKenzie County, specifically, receives around $25 million of that, according to Drovdal.
Should House Bill 1358 be approved, nearly $284 million would be sent to impacted municipalities, increasing McKenzie County’s revenues to $57 million. In addition, the bill is the first of its kind to address funding for emergency service providers like EMS and fire, as well as local law enforcement departments.
And according to Drovdal, the other aspect of House Bill 1358 that makes it stand out is that it takes ‘hub cities’ like Williston and Dickinson out of the production tax formula and provides them with direct funding, which in turn provides smaller impacted communities with more funding than they have been receiving.
According to Drovdal, schools would also come out substantially better than they have in the past, as well as townships.
“We need to take care of business first, and that business is taking care of infrastructure needs,” states Drovdal on why he is paying close attention to the outcome of this bill.
Another proposal, House Bill 1318, is referred to as ‘the catch-up plan’ and would give even more funding to impacted local governments than House Bill 1358. Its only hitch, according to Drovdal, is the two-year sunset clause that comes with it.
According to Drovdal, House Bill 1318 would return 80 percent of the extraction tax back to impacted counties, allowing them to get caught up on their infrastructure needs. Then, in two years, the funding would go back to the original production tax formula.
“In two years we will go back to the current production tax formula, so it will be a tough sell,” states Drovdal.
The main reason Drovdal believes it will be a hard bill to pass is due to the incredible increase in revenues it will send to impacted western communities, despite its two-year lifespan.
The other bill that could be promising for helping impacted western communities is Senate Bill 2258, which was sponsored by Gov. Dalrymple and also increases the amount of money being filtered back to impacted oil and gas-producing counties.
Only one bill will pass and Drovdal states he is keeping track of House Bill 1358 the most.
That piece of legislation, according to Drovdal, increases the portions going back to each producing county, as well as their impacted cities and schools. Townships will also be eligible for funding. And for the first time, emergency services and law enforcement departments are addressed.
The new formula proposed by this bill also only applies to counties that have previously received at least $5 million in oil tax revenues, which includes the state’s top 10 oil-producing counties of Mountrail, McKenzie, Williams, Dunn, Divide, Bowman, Stark, Burke, Billings and Bottineau.