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Effort to raise ND oil tax not moving forward this year, backer says

Former democratic state lawmaker Ed Gruchalla. Michael Vosburg / Forum News Service1 / 2
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BISMARCK—A leader in the effort to raise North Dakota's oil tax said Monday, Feb. 19, they're not moving forward with a ballot measure this year.

Former Democratic state lawmaker Ed Gruchalla said the effort lacked backing from any "major groups" and faced fierce and well-funded opposition from the oil industry. He said the proposal could come back in a future election or during the next legislative session.

"We know it takes money to win (an) initiated measure," Gruchalla said. "We just don't have the funding right now."

The ballot measure would have raised the state's oil extraction tax from 5 percent to its previous rate of 6.5 percent, reversing a central piece of the overhaul lawmakers passed in 2015. Gruchalla previously argued "it would bring money back to the citizens of North Dakota that was stolen in a shady last-minute deal in the final days of the (legislative session)."

But Republican Tax Commissioner Ryan Rauschenberger previously said the state would have collected $1 billion less if lawmakers did nothing in 2015. The Republican-led Legislature also eliminated price-based tax breaks known as triggers in an effort to make North Dakota's revenues more predictable.

The reform didn't change the 5 percent gross production tax, giving the state an overall rate of 10 percent. North Dakota is the No. 2 oil producer in the country behind Texas.

North Dakota Petroleum Council President Ron Ness welcomed Monday's news, arguing that the tax law changes "benefited the state greatly." He said raising the tax would make the state less competitive.

"I think the legislators understood the need to stabilize the tax on both ends," Ness said.

John Hageman

John Hageman covers North Dakota politics from the Forum News Service bureau in Bismarck. He attended the University of Minnesota in the Twin Cities, where he studied journalism and political science, and he previously worked at the Grand Forks Herald and Bemidji Pioneer.  

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