Greetings from your District 36 senator.
I would like to focus this article on the oil and gas production tax accessed on the oil and gas produced in North Dakota. North Dakota has two types of oil and gas production taxes: The 5 percent Gross Production Tax and the 6 1/2 percent Oil Extraction Tax.
The 5 percent Gross Production Tax is shared by the state of North Dakota and the counties where the oil and gas is produced. The state's share (20 percent) is split a third to the oil impact fund(capped at $8 million). (Grants given to oil producing counties for oil related impacts). Two thirds goes to the state general fund. The state general fund is capped at $71 million with the balance going into the oil trust fund. The county share (80 percent) is shared by the counties and the state oil trust fund. The counties share is governed by the total oil and gas produced in the county. It is approximately 37.5 percent of the first $18 million produced and then 10 percent of the total produced thereafter.
The counties share is split between county government (45 percent), the school districts in the county (35 percent) and the cities in the county (20 percent). Townships are also included in the formula distribution and there are also limits on the larger cities in the county and school districts in the formula.
The 6 1/2 percent Oil Extraction Tax goes to various funds in the state government. Sixty percent of this tax goes to the state general fund (capped at $71 million), with $4 million going to the state Oil and Gas Research Council fund and the balance to the oil trust fund.
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Twenty percent goes to the state Resource Water Trust Fund and 20 percent goes to education purposes. The Water Resource Trust Fund is used for water projects in the state such as the Southwest Water Authority. The education fund is used for the school trust fund (50 percent) and the state foundation aid stabilization fund (50 percent).
This is a short summary of the formula for the uses of these two taxes.
As you can see, these two taxes are used for many purposes and support a large part of our state and county governments. This tax has given us a state surplus budget, lower property and income taxes, state university building improvements, local school district building improvements, state and local water district improvements, plus state and county road improvements.
Most of us legislatures in the oil-producing counties feel more of this tax should be given back to these counties for the impacts from the industry to help them with their infrastructure needs.
The 2009 Legislature increased the oil-producing counties share by approximately $29 million. I know we will work hard to increase this again in the 2011 legislative session.
I wonder what North Dakota would look like today without the Bakken oil discovery? I personally say "thank you" to the oil industry for being a prominent business in North Dakota and hope you become a permanent citizen of the state.
-- District 36 Sen. George Nodland, Dickinson. E-mail him at glnodland@nd.gov .
