American Oil and Gas Reporter - June 2019 - 39

ects, with an emphasis on areas impacted
by oil and gas development, describes an
article by Tax Commissioner Ryan
Rauschenberger.
While it does allocate funding for infrastructure projects elsewhere in North
Dakota, the bill provides a formula for
distributing nearly a third of gross production tax revenue to counties, cities,
townships and school districts in the western part of the state.
The bill will "allow western communities
to continue investments in infrastructure
important to workforce development, quality
of life enhancement and further industry
development," Pelton describes.
"This is the most positive movement
for local governments we have seen in
many years," a local newspaper quotes a
North Dakota mayor.
Sharply Up
The industry monitored wrangling
over the state's sovereign wealth fund,
but did not take a position on the issue,
which lawmakers ultimately moved to
study during the interim, Pelton notes.
"We have long advocated for a plan
that considers the road ahead," he describes.
"After the somewhat stopgap measures
of the past couple years, we are pleased
with the decision to include the public in

STRESS.

an interim study of the issue."
The issue boiled down to the fate of
earnings generated by the $5.4 billion
Legacy Fund voters approved in 2010.
When state revenues fell off during the
industry downturn, legislators shifted
$200 million to the general fund in 2017,
and this year it got $100 million from the
fund, published reports note.
"The question gets down to what Legacy Fund earnings are to be used for, and
how potential expenditures fit with the
original intent of the fund," Pelton relates.
"With that much money, everyone wants
a bite at the apple."
As the industry's recovery has taken
hold in the Bakken, the effect has been
felt across the state's economy. A yearend report by the state's tax commissioner
showed taxable sales and purchases increased 12.5 percent in 2018, the sharpest
annual increase since 2012.
According to Rauschenberger's office,
oil and gas development propelled 2018
taxable sales and purchases to $20.2 billion, up from nearly $18 billion in 2017.
In the last 10 years, tax revenues generated
by oil and gas production account for 44
percent of state tax revenue, indicates a
new report co-sponsored by NDPC and
the Western Dakota Energy Association.
For the 10 years ending in 2018, the

state's separate oil extraction and production taxes raised almost $18 billion,
of which more than $9.3 billion went to
local communities and infrastructure,
transportation and statewide water projects,
the industry report details.
At the end of the 2019 session, legislators passed a record-setting, $14.7 billion
state budget, which includes federal revenues but also reflects the increase in oil
tax revenue and the effect of industry activity on the rest of the state's economy,
Rauschenberger reports.
The state's general fund was approved
at $4.8 billion for the next biennium,
higher than the 2017-19 budget but still
lower than the 2013-15 record of $6.9
billion, published reports indicate.
❒

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American Oil and Gas Reporter - June 2019

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