ND Oil Tax Revenue Projections Double, But Don’t Go Thinking That Means Tax Relief
Good news, North Dakotans. Thanks to explosive growth in oil production in the Bakken oil patch tax revenues to the state are exploding.
The original forecast predicted oil production was between 390,000 and 425,000 barrels per day, Fong said. What actually happened is the state averaged 639,277 barrels per day. Obviously, that means more revenues. During the 2011 legislative session the state was projected to collect $2.041 billion in oil tax revenues, but that projection has now ballooned up to $4 billion thanks greater than expected production levels.
But don’t go thinking that windfall means the state will lighten the tax burden on North Dakota citizens and businesses. “So even though this number grows exponentially,” Senate Appropriations Committee Chairman Ray Holmberg told reporter Teri Finneman, “it’s not $1.6 billion of accessible money.” All of those revenues are already earmarked to be spent.
Nearly $290 million goes back to the oil-producing counties and Three Affiliated Tribes to help with oil impacts.
Another $765 million is tied up in funds with specific rules about how money can be spent, including the $446 million in the Legacy Fund. The voter-approved fund collects 30 percent of oil tax revenue, and none of the money can be spent until 2017.
That leaves the $341.8 million in property tax relief that will go out statewide and the $259 million in general fund money that legislators can spend on any state appropriation. The general fund will reach its $300 million cap in oil tax revenue shortly.
This is the problem with the way the state earmarks revenues for specific funds, including the Legacy Fund which was supported by the usual coalition of Republicans and liberal unions/special interest groups who are the usual suspects in growing government and opposing tax relief. By creating formulas for spending revenues we are left with a situation where the state never really has a surplus (except when the politicians find it expedient to talk about a budget surplus). Revenues are automatically diverted into a plethora of state funds, most of which are stuffed with more cash than they need, and the taxpayers are left with little proposition for relief.
That’s why, in biennium after biennium, we see roughly 25% increases in state spending and very little in tax reduction.
We need a better budgeting process. But before that, we need better political leadership.Tags: North Dakota News, ray holmberg, spending, Taxes