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North Dakota lawmakers propose oil and gas tax tweaks

Sen. Rich Wardner, R-Dickinson, chairman of the Energy Development and Transmissin Committee, spoke to committee members on proposed changes to the oil and gas tax allocation formula on Tuesday afternoon in the state capitol. Tom Stromme / Bismarck Tribune

BISMARCK—North Dakota lawmakers of the interim Energy Development and Transmission Committee heard proposed adjustments Tuesday to the state's oil and gas Gross Production Tax formula.

The potential tweaks for oil and gas producing political subdivisions are in the name of "Operation Prairie Dog," the Republican proposal to fund infrastructure improvements in cities, counties and townships outside nine designated oil-producing counties and the "hub cities" of Dickinson, Minot and Williston.

Wardner said the formula adjustments would result in virtually the same allocations for those in oil country after shifting the three hub cities, their schools and other recipients from one stream of oil and gas GPT to another.

"It represents the same amount of money; however, we are calculating it differently," Wardner told committee.

Sen. Brad Bekkedahl, R-Williston, was involved in discussions about the proposed adjustments with the three cities, and said the mayors agreed to the percentage allocations based on weighting factors in the formula.

"If it's successful in legislation, the intent is that every year there is a recalculation ... of the numbers for the distribution to hub cities based on each hub city's change in any employment figures or any production figures within their county," he said.

He and Wardner pointed to changes of plus or minus 1 percent to 3 percent in allocations for Dickinson, Minot and Williston from the adjustments to the hub city funding in the GPT formula, while the state would gain about $59 million in funding that "will free up" after shifting the hub cities to the stream with other political subdivisions.

Wardner also said the "buckets" that would be created for infrastructure projects would fill each biennium based on a "conservative" estimate of oil production at 1.2 million daily barrels, given $52.50/bbl. If they don't fill, he said the funds would be prorated out.

"Once we get going, every two years, it's going to be there," Wardner told the committee.

House Minority Leader Corey Mock, D-Grand Forks, said he supports the idea of funding infrastructure improvements, but cited needs still in western North Dakota.

"I do want to make sure that we're not depleting from one source or robbing from the west to pay for the east," he said. "I don't want to see us moving down a path that's going to make it too difficult for us to make corrections down the road."

He also invoked the uncertainty that could come in planning budgets with infrastructure projects waiting on state money that would not available until a biennium's second half. He said he'll look for "more assurances to the rest of the state" in the proposal in the months ahead before January.

"A lot of questions were answered here. We've got a lot more homework to do," Mock said after the committee meeting.

Wardner said the Republican proposal has been "well received" since state party leaders rolled it out in late July.

"It's about infrastructure needs. That's all I heard," he said.

A bill draft on "Operation Prairie Dog" is still in the works, with the committee's final meeting in September.

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