Senate Majority Leader Rich Wardner, R-Dickinson, center, outlines a bill to provide funding support for western North Dakota communities. He spoke at a Wednesday press conference in the state Capitol in Bismarck. In back are Rep. David Rust, R-Tioga, left, and Sen. Bill Bowman, R-Bowman. (Bismarck Tribune – Photo Credit)
BISMARCK, N.D. — Western North Dakota Republican lawmakers plan to push for changes to the state’s oil and tax gross production tax formula that would more than double the amount of money returning to oil-producing counties in the coming biennium.
Democratic-NPL Party leaders say the proposal’s increase in funding for the oil patch is a good sign. They say there are many questions about the proposal’s details that will require intense scrutiny during the 2015 session.
Senate Majority Leader Rich Wardner, R-Dickinson, led the unveiling of a proposal Wednesday at the state Capitol that would send 60 percent of oil and gas gross production tax revenues back to the oil-producing counties. Under the current formula, the state receives 75 percent and the counties 25 percent.
It would increase the amount of money going back to oil-producing counties from approximately $1 billion during the current biennium to about $2.2 billion in 2015-17.
“This will help them get ahead of the game,” Wardner said. “You will see the light at the end of the tunnel.”
North Dakota has a 5 percent gross production tax. Wardner said 4 percent of the 5 percent would constitute the proposed 60-40 split. The remaining 1 percent goes to the state and would be allocated to the state’s nine largest cities and school districts with at least 1 percent of its population employed in the oil and gas industry.
The proposal also calls for a reduction in the Oil and Gas Impact Grant Fund from its current funding level of $240 million to $150 million in 2015-17. Wardner said county officials he has spoken to have grown weary of filling out paperwork for grants that cover only a fraction of what they need.
Wardner said housing and upgraded infrastructure are needed to assist oil patch communities and keep the benefits of oil production flowing to the entire state.
“If you’re going to accomplish this, they’re going to need the resources to get it done,” Wardner said.
The current formula provides the state’s large cities $375,000 and school districts $125,000 for each percentage point of private employment in the oil and gas industry. The new proposal would increase these allocations to $500,000 and $150,000, respectively.
Rep. Keith Kempenich, R-Bowman, said the state is starting to get a handle on the scope of the boom.
“I think we’re starting to understand what we’re going to need,” Kempenich said.
Senate Minority Leader Mac Schneider, D-Grand Forks, said the state has a responsibility to provide more to western North Dakota. He said the Democrats supported the need for improving the formula during the 2013 session and “not 40 days out from an election.”
Schneider said the proposal leaves out communities located in counties where annual oil production tax revenue is less than $5 million annually. This omits numerous communities on the periphery of oil activity that are experiencing heavy impacts.
“That’s a significant omission,” Schneider said.
Schneider also said the oil impact grants should remain at the current level in case they’re needed.
House Minority Leader Kenton Onstad, D-Parshall, said during the 2013 session he proposed a bill allocating 80 percent of revenue to the oil-producing counties, which failed. He said the needs in the oil patch have been there for longer than the current biennium.
“It’s frustrating,” Onstad said. “Why are we taking it seriously now when it’s been there for three sessions?”
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