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Lawmakers: Give counties more ND oil tax money

James Macpherson, Associated Press

BISMARCK, N.D. (AP) -- The 17 oil-producing counties that have helped swell North Dakota's coffers to record levels should get a larger share of production tax revenues to improve infrastructure strained by rapid energy development, a group of lawmakers proposed Thursday.

House Minority Leader Kenton Onstad joined lawmakers from both parties in introducing a measure they called a "catch up and plan initiative." It would redirect to those counties a one-time $2.4 billion payment from the oil production tax, or about 80 percent of the entire fund over the next two years.

Funding for oil-producing counties in recent years hasn't come close to meeting the needs for such things as road building and repair, utilities, housing and schools, he said.

"There are infrastructure needs that should have been addressed six years ago," said Onstad, D-Parshall.

The state currently trails only Texas in oil output. North Dakota has risen from the ninth biggest oil state just six years ago with improved horizontal drilling techniques in the rich Bakken shale and Three Forks formations in the western part of the state.

Gov. Jack Dalrymple's $12.8 billion budget proposes that $532 million be allocated to oil-producing counties over the next two years. The Republican governor's plan also includes 171 new state employees, including more law enforcement, court, health and regulatory workers to monitor the growing energy industry. Dalrymple's budget also includes about $1 billion in road work in western North Dakota.

Dalrymple spokesman Jeff Zent said the governor's budget also $214 million in so-called energy-impact grants to communities affected by oil development.

Onstad said there are more than $828 million in immediate infrastructure needs in Williams County, which currently is the biggest oil-producing county in the state. Money would be divided between counties based on the percentage of their oil output, said Onstad, whose district is in Mountrail County, which has gone back and forth with Williams County as the state's top oil-producing county.

Onstad's bill is co-sponsored by Republican Reps. David Drovdal, of Arnegard and Keith Kempenich of Bowman, both of whom are from oil-producing counties. Sens. John Warner, D-Ryder, and John Andrist, R-Crosby, also have signed on the bill and are from oil-rich counties.

Senate Minority Leader Mac Schneider said he and other lawmakers from areas outside the oil patch are sympathetic to allowing oil-producing areas to keep a much bigger share of the oil-production tax, at least temporarily.

"It only makes sense to keep most of the wealth where it was created," said Schneider, D-Grand Forks. "I recognize they have literally paid the price."

North Dakota is slated to collect more than $3.8 billion in oil taxes for the current two-year budget cycle that ends June 30. The state is forecast to collect another $5.2 billion in oil taxes in the upcoming budget cycle, Onstad said.

Schneider and Onstad said the money that would be used for the one-time expenditure already has been collected and would not threaten funding for any other projects in the state at present.

"It's not a budget-buster," Schneider said.

For comparison, the $2.4 billion that would be directed to oil-producing counties under the proposal nearly matches the state's entire two-year budget in the mid-1980s.

Schneider and Onstad said they do not favor increasing taxes on oil producers but rather reallocating the revenue to oil-impacted areas.

"We want to take care of the goose that laid the golden egg but we want to make sure we take care of its nest too," Schneider said.


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