Strong Oil Activity Raising ND Tax Revenues

Great news in the Fargo Forum about “greedy oil companies” bringing about a windfall in state tax revenues today via Taking Back ND:

Strong oil activity in western North Dakota could soon benefit the entire state through property tax relief and more money for education and human services.
Total state and local tax revenue grew 16 percent in fiscal year 2006 to $1.3 billion, Tax Commissioner Cory Fong said.
Corporate income taxes increased 78 percent to $111.8 million. Oil taxes increased 38 percent to $169.6 million.
Oil companies pay corporate, extraction and sales taxes, all of which have helped boost the state’s general fund to $166 million ahead of the $927 million June forecast, according to an Office of Management and Budget report.
In addition, the state’s “rainy day” or Budget Stabilization Fund has grown to $100 million, said OMB Director Pam Sharp.

I’ve pointed out the positive economic impact of this boom in the ND oil industry before.
What has brought about this renewal in North Dakota’s oil industry? The high profits in the oil industry, of course. And who wants to try and end those oil industry profits, in turn ending this increased activity in ND’s oil fields and thus the increase in tax revenues? Why, ND Senator Byron Dorgan, of course, with his “windfall profits tax” nonsense.
Demand for oil has been increasing in this country for decades. Every year the oil industry must explore for new resources and then exploit those resources in order to provide Americans with the oil and gas they need. Unfortunately, that exploration and exploitation has gotten extremely costly thanks to burdensome government taxes and regulations. It has now become necessary for the oil industry to raise incredible amounts of capital before they can even begin to expand oil production in places such as North Dakota.
Truth be told, if we want to blame anyone for “obscene” oil industry profits we should blame the politicians who have made “windfall profits” a necessary part of the oil industry’s efforts to keep up with demand.
North Dakota is something of a special case when it comes to the oil industry. Our reserves of oil aren’t quite as productive as reserves available elsewhere, and it is only profitable for the oil industry to pump the oil we have as long as prices are above a certain level. If Byron Dorgan gets his way with this “windfall profits” tax the oil industry will have less money to develop in North Dakota, and we can wave bye-bye to the increased economic activity and increased tax revenues.
On a related note, you gotta almost laugh (though it’s really not all that funny) at how some of the state’s politicians are almost literally licking their chops at the opportunity to spend all this new cash.

House Minority Leader Merle Boucher said the state’s surplus will make the upcoming legislative session interesting.
“It’s going to be one of those situations where people are going to come to town each with their own priorities, and any time that you have those extra dollars, there’s going to be a lot of competition for them,” said Boucher, D-Rolette.

Notice how Boucher apparently isn’t even considering the idea that maybe some of these tax revenues should go back to the taxpayers.
Thankfully, state Tax Commissioner Cory Fong has the right idea:

Because of the state’s strong economy, Fong voiced support Wednesday for property tax relief to the state’s interim Finance and Taxation Committee.
“Having this surplus and having this good economic time is an opportunity for us to really look at doing some real significant, meaningful property tax relief,” Fong said.
“If there’s an area where people are concerned, it’s with property taxes,” he added.
Gov. John Hoeven also said residents could use more help with property tax relief. Education, human services and economic development are other Hoeven priorities, as well as holding “the line on taxes.”

My only complaint here is that I’m not sure that we should increase spending on education or human services simply because we have more tax dollars available. Do those areas really need more funding?
I’d have to be convinced that they do before I’d support allocating any more funds in their direction.