May 8, 2013

City feels short-changed by Legislature

By Neal A. Shipman
Farmer Editor

As House Bill 1358 made its way through the final days of the North Dakota Legislature, Watford City Mayor Brent Sanford was keenly following the bill closer than most people.
For Sanford, House Bill 1358 was the answer that the city was looking for to help transform this once quiet city of 1,400 people five years ago, into the new city that would be able to provide the needed infrastructure to serve the 10,000 oil industry-related people that are now calling the Watford City area their home.
At the heart of the issue for Sanford was how would the State Legislature decide to dole out the $1.147 billion that was part of the final compromise bill in the last two days of the session.
If the Legislature provided more money to the highly-impacted cities and counties, like Watford City and McKenzie County, then Sanford believed that things were going to be looking up for Watford City. On the other hand, if the Legislature opted to just provide a token increase in funding to communities such as Watford City, Stanley and Tioga, while shifting the majority of the funds to more urban centers, then Sanford was apprehensive of where his city would be in the next few years.
In the end, although Watford City stands to receive $20 million in state assistance under the new oil and gas distribution formula, it is far less than what Sanford believes the city should be receiving.
“House Bill 1358 represented the culmination of a monumental effort by many people from across the state to attempt to fix the inequity of the state’s oil tax distributions to the oil- producing counties,” states Sanford. “While it gives us some hope  that we will be able to begin chipping away at the infrastructure and community impacts, it falls far short of the actual needs.”
According to Sanford, Watford City, which had a 2010 Census population of 1,744 people, has over $300 million worth of new city street construction, water and sewer infrastructure, and schools and hospitals to construct as the population pours into the community over the next few years.
And that is why Sanford was hopeful that the Legislature would have provided greater assistance to the smaller, but heavily impacted oil communities.
“We estimate that we could receive $30 million, including impact grants, over the next biennium toward those needs,” states Sanford. “We have little ability to bond indebtedness for the remainder of these impacts.”
Without the needed money, Sanford believes that the end result will be that the city will have to slow down on providing the needed roads and water and sewer line projects.
And that means, according to Sanford, that instead of being able to find new homes and apartments within Watford City and its ETA, the new residents have to continue to live in man camps and rural RV parks.
“Unlike hub cities, we have no direct allocations,” states Sanford. “Yet we are the county seat of the busiest drilling area and the epicenter of the state’s oil impact.”
McKenzie County, according to Sanford, has over one-third of the state’s drilling rigs and one-third of the year-to-date drilling permits.
As part of House Bill 1358, the hub cities of Williston, Dickinson and Minot will receive direct allocations of $59.71 million, $33.60 million and $12.61 million to address their oil impact needs during the next two years.
For smaller oil-impacted communities, like Watford City, HB 1358 provides $102 million over the next two years which the cities can apply for.
“Right now, Watford City is planning to request $194 million in those grants, which is more than is available to all of the impacted communities,” states Sanford. “This is inequitable. How can Watford City and the small cities plan for the future when they have to fight for the grants?”
While Sanford is upset with the final version of HB 1358, so is District 39 Sen. Bill Bowman, who so objected to the way cities like Watford City were under funded that he was just one of two legislators who voted against the final bill.
“The bill short-changes Watford City and McKenzie County,” stated Bowman. “Cities have to know what they have to work with.”
And that is Sanford’s point. Without knowing how much money the city of Watford City can expect to receive over the next two years, planning isn’t possible.
“We’ve got to get close to $20 million or we are sunk,” says Sanford. “We need $300 million just for improvements in the next two or three years. And we’re not going to get anywhere near that. It’s disgusting.”
Part of Sanford’s frustration with the final version of HB 1358 is that the Legislature did not take into consideration the amount of revenue that McKenzie County or the other major oil-impacted counties are infusing into the state’s coffers.
“As a county, McKenzie County could very well put $1 billion into the state treasury this biennium,” states Sanford. “And what is the county going to be getting back - $100 million, which is just 10 percent.”
So with state oil impact funds limited, Sanford knows that the next few years are not only going to be hard on city officials, who are trying to grow the city, but also on everyone who is living here.
“The locals are weary of the layer of dirt over our town and the long lines and dangerous traffic,” states Sanford. “And the local officials are weary of not being able to get the message across that the state needs to invest in the oil impact with us, or the oil activity may go away.”
While Sanford acknowledges that all Watford City can do now is live with the funds that will be provided under HB 1358, he knows that it is also important for oil-impacted areas to begin building their case for the next legislative session.
“The next two years will be difficult dealing with the growing pains in all aspects of our community,” states Sanford. “But going forward, we will have to work at making a better case for the 2015 session for distributing 35 percent of the oil taxes to the producing oil counties as the state does with our coal counties and what neighboring states distribute to their energy-producing local governments to handle direct energy impacts.”