Say Anything Blog

Business Week ran a story about the states in America with the best environments for business along with a slide show of the 25 states with the best business environments.  Given that North Dakota has been bucking national economic trends with a growing state economy and state budget surpluses I looked to see where my state is ranked.

What’s surprising (not to me but I’m sure to a lot of people on the state) is that North Dakota wasn’t even in the top 25.  Instead, the state ranks near the bottom of the list at 30.

Business Week’s rankings were based on data from the Tax Foundation, which you can read here.  What’s interesting is that in the breakdown of each state’s different taxations (page 9 of the report), North Dakota scores pretty well in property taxes (ranked 5 out of 50 states) but toward the bottom on both income taxes (35 out of 50) and unemployment taxes (34 out of 50).

In fact, if it weren’t for North Dakota’s overall score being leveled out by property taxes the state would have scored much lower.  And given how many North Dakotans are unhappy with the level of their property taxes, it illustrates just how bad this state’s tax environment really is.

What conclusions can we draw from all of this?

I think it’s clear that North Dakota’s currently-flourishing economy is a bit misleading.  Yes, our economy is flourishing, but it isn’t thanks to our state’s tax-and-spend policies which keep tax burdens high to fund double-digit spending increases every biennium and ridiculous economic development schemes that, frankly, rarely work out well.  Instead our economy is due mostly to the re-invigorated oil industry in the state.  We have oil, much of it relatively newly-discovered, and the nation has needed oil over the last few years.  That’s sparked a massive build up in the state oil industry, pumping a lot of money into our economy and into our local and state tax coffers.

Which means that our economy has grown despite big-government policies put in place by Governor Hoeven and the legislature, not because of them.  And with all our economic eggs in one basket (the oil industry), we are in a pretty tenuous position as our state political leaders including the government continue to spend money at double-digit growth rates going forward.

Especially with the price of oil having fallen to rock bottom.

Recently on the Scott Hennen Show I heard North Dakota businessman Mike Marcil (CEO of the Marcil Group) talking about what a great job our state’s political leaders have done as stewards of the state economy.  I hear a lot of people in the state echo that same line, but I think it’s bunk.  This state is doing well because of the oil industry.  Period.  And it’s worth noting that when people like Marcil lavish praise on the current tax-and-spend leadership in the state, it’s because people like Marcil are usually the beneficiaries of a lot of that spending.  In Marcil’s case, economic development dollars that have done a lot to line his pockets.

Always follow the money.