Spending And Hostility To Tax Cuts Hurts North Dakota In Business Ranking

North Dakota’s roaring economy puts the state at the top of a lot of economic lists that are good to be at the top of. Growth in incomes. Growth in gross state product. Growth in business development. There’s no doubt, North Dakota is thriving right now.

And the state’s politicians like to take a lot of credit for that, which isn’t always deserved. The state’s political leaders should get credit for not taxing and regulating the oil boom out of existence, but sometimes from the press releases and sound bites you get the idea that they put the oil under the ground too.

That’s just not so. In fact, I’d go even further to suggest that the economic boom driven by the oil boom is covering up a lot of less-than-good policy which could be improved.

To illustrate that point, look at CNBC’s 2013 rankings of the best states to do business in. North Dakota is number three. Texas, which has also benefited from an oil boom of their own, is number two. But number one is a state that doesn’t have the wind at its back from an energy boom: South Dakota.

So how did South Dakota beat out Texas and North Dakota? Low taxes and limited government:

CNBC Senior Correspondent Scott Cohn reported today live from the Mount Rushmore National Memorial and counted down the top five states throughout CNBC’s Business Day programming and on CNBC.com. Coverage of America’s Top States for Business will continue on-air and online through Wednesday, July 10th.

“South Dakota has always been a solid performer in our study, but with businesses focusing more than ever on low costs, the state really shines,” Cohn said. “We found it has one of the lowest tax burdens in the country as well as low wage and utility costs. The regulatory climate is one of the friendliest to business anywhere, and the biggest issue in South Dakota’s booming economy is that low unemployment means fewer available workers.”

Put simply, South Dakota is at the top of this list because the leaders there have purposefully worked to keep taxes and regulations low, which has resulted in a strong economy that provides plenty of revenue for the state to address things like infrastructure.

North Dakota is near the top of this list because we have an oil boom, not because of any policy agenda set by the state’s leaders.

That’s an important distinction, and to illustrate the point further, consider that in 2011 and 2010 (years when the full impact of the oil boom wasn’t yet being felt on the economy) North Dakota was much further down this list, ranking 13th and 12th respectively.

North Dakota is being ranked as a good state for business because we were lucky enough to have a lot of oil under the land, and the right market conditions for companies to pump it at a profit. The state didn’t move up this list because of fiscal restraint or tax reforms.

Recently Stephen Moore wrote a column for the Wall Street Journal about states on spending sprees. He mentioned North Dakota (and quoted a certain well-known blogger):

Oil-rich North Dakota is also celebrating Christmas early. The Republican legislature and Gov. Jack Dalrymple approved budgets this spring for the next two years that pump up spending by more than 50%. The budget finances a massive expansion of Medicaid and pork projects, such as the purchase of a marina at a state park. “It’s hard to imagine Democrats would have spent this much,” laments Rob Port, the state’s top taxpayer watchdog and creator of the popular political blog, Say Anything.

And not only has North Dakota been on a spending binge, but there has been resistance to tax reform as well. During the recent legislative session there was a clash between state House Republicans who wanted $500 million in income tax cuts and Governor Jack Dalrymple who, backed by the Senate, wanted a much smaller package (a bill proposed by Rep. Scott Louser to eliminate the income tax for two years was shot down even in the conservative House). The govenor won, and the tax cuts were cut and half.

Yet, when the legislative session ended, the Office of Management and Budget released figures indicating a $1.6 billion revenue surplus for the state, a figure that (to the consternation of legislators) was 48% higher than what the budget was based on.

North Dakota citizens and businesses could be paying far less in taxes than they are, but because of the hostility toward significant tax reform from the state’s leadership, they aren’t getting the relief.

Which is why South Dakota, and not North Dakota, is on top of this list.

Rob Port is the editor of SayAnythingBlog.com. In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters.

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  • kevindf

    War has been declared on the non-subsidized private sector in this state!

  • Patrick R. Pfeiffer

    ND budget surplus = Mt. Everest.
    Tax relief trickling back to the tax payer = the ant hill in your backyard.
    These guys just do not want to let go of all that money.

  • Ratbite

    & what will the RINOs running the state do when Obama & his EPA shuts down the coal industry & fracking in North Dakota?? Where’s the money going to be coming from for the wasteful big spending ways?? You guessed it you & me & who ever’s left after the oil & coal business leave rapidly.

  • Guest

    So the heading is about how taxes and spending are hurting the rating but yet North Dakota’s rating has improved by ten with recent government policy. Welcome to the spin zone.

    • $8194357

      Goin Gault on em, huh.

    • http://sayanythingblog.com Rob

      Actually, if you’d read the post, you’d know that it was a comparison to SD which is at the top of the list because they limit government.

      ND is because we have an oil boom which will one day not be the case.

      The boom is covering up policy that should be fixed.

      • Guest

        I read the post. Keep spinning Rob. ND is 3 out of 50 and all you can say is geez if only we were like SD we would be so much better. Then you even talk against your own headline in saying ND has risen ten spots recently. This is just another example of how you dishonestly spin the news.

        • http://sayanythingblog.com Rob

          I don’t think it’s spin. North Dakota has moved up the list because we have an oil boom, not because we’ve done anything significant with policy.

  • PK

    “States received points based on their rankings in each metric. Then, we
    separated those metrics into ten broad categories, weighting the
    categories based on how frequently they are cited in state economic
    development marketing materials. That way, our study ranks the states
    based on the criteria they use to sell themselves.”

    So their study is dependent on how much the government spends and what they say in marketing? Is this study a proper representation of reality?

    • http://sayanythingblog.com Rob

      I think you should go back and read that again.

      It is weighted for how the state markets itself, but based on policy.

      • Guest

        I read the post. Keep spinning Rob. ND is 3 out of 50 and all you can say is geez if only we were like SD we would be so much better. Then you even talk against your own headline in saying ND has risen ten spots recently. This is just another example of how you dishonestly spin the news.

      • PK

        I was just asking questions about what that meant. You voted me down for asking a question? That’s kind of rude. So it’s based on reality, but also “weighted” on the state’s marketing, so wouldn’t the final scores be affected by the state’s marketing campaigns, hence may not be an accurate representation of reality? Maybe we are number one and just don’t market ourselves as such.

  • $8194357

    Greedy statist leeches.

  • kevindf

    CNBC must have found out about all the people in ND who pay more in state income taxes than federal income taxes. Forewarned is forearmed.

  • PK

    http://blogs.wsj.com/washwire/2013/07/10/navy-drone-successfully-lands-on-aircraft-carrier/?mod=WSJ_hpp_MIDDLENexttoWhatsNewsForth

    Here’s some interesting news. An autonomous Navy drone landed on an air craft carrier.

    “Unlike Air Force and CIA drones, which are remotely piloted, the Navy
    drones fly autonomously with the planes’ robot brain making the split
    second calculations necessary to conduct an arrested landing on the deck
    of a moving ship.”

    DARPA has bids out for autonomous humanoid ground robots, literal Terminators. Why are we allowing the government, who spies on all of us and doesn’t respect the Constitution, to build Skynet?

    • $8194357

      End times “New world Order”, huh…

      • PK

        “It’s a big idea… a New World Order.” G.H.W. Bush.

        • PK

          Yes ok, to whoever voted me down, Bush never said that. He never called for a New World Order multiple times. He was never a member of Skull and Bones either. It’s all a conspiracy theory. I”m crazy.

          • $8194357

            Elitist olagarchs know no party or national loyalty, huh..

          • $8194357

            Social justice false morality and freedom.‏

            Quote:

            The grounds of American freedom

            Natural law is compatible with Polanyi’s principles of freedom. The Declaration of Independence proclaimed that men have rights based in natural law (or the laws of nature and nature’s God). This was a metaphysical appeal to the realm of created nature, which is universal, and hence, is transcendent to the individual and transcendent to the society. The inclusion of the phrase “all men are created equal” has an explicit meaning in natural law theory. All men are individual persons fully endowed by nature and nature’s God with all the attributes of humanity. No class or race of men fails to possess all of these created attributes, and therefore none may be ruled in an arbitrary way. All men possess the same natural rights endowed by sources that are transcendent to the system of ruler and ruled. Therefore, the ruler who curtails these rights is a tyrant and an unjust man. All legitimate rule must he hedged about by laws and restrictions that protect human rights.

            The entitlement to freedom must not be abridged by governors or rulers, because human nature requires freedom. The Creator designed men to need a measure of freedom to exercise the faculties he gave them. A man denied freedom is crippled and wounded.

            http://www.renewamerica.com/analysis/hutchison/130711
            Social justice false morality and freedom‏

  • sbark

    and then theres Minn………N.Dak and S.Dak on the west, Wisc with Scott Walkers reforms that have brought fiscal sanity to the state……..
    meanwhile Minn whines about a tourist billboard and threatens to not use coal fired electricity, along with the entire leftwing golden calfs of welfare, abortion, BLT bunch, enviro, gun grabbers…..Is parts of Minn soon to be the new “Detroit”?….
    Northern Minn should follow N. Colo move against the Liberal southern/Big city and threaten to secede and form a new state……..

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