Bette Grande: Policy And Budget Choices In A Time Of Great Uncertainty

With the ND legislative session a few weeks away there are many things to ponder over the holidays.  There are opinions on every side about the impact and duration of lower global oil prices, but we are probably not going to know and understand the long-term impacts before the end of the legislative session.

The challenge is to make sound policy and budget choices in a time of great uncertainty.  There is little we can – or should – do about the current drop in oil prices.  But we can use this reminder as an opportunity to make good decisions for our future.

Budget

Budget forecasting is never perfect, but it will be a much bigger challenge in this environment.   We do not know how long prices will remain at this level, or if they will drop further.  Current oil prices will negatively impact our oil industry but they will benefit our farmers and ranchers as input and fuel costs drop.  What will the net impact be to ND income and sales tax collections?  What would a drop in oil tax revenue do to the current property tax program at the state level?

The first priority should be set a realistic conservative expectation of state revenue for the next biennium.   Second we should fund our priorities based on that expected revenue.

Chance for a “Catch up”

Some have said the drop in oil prices will give us the chance to catch up in western North Dakota.   I do not agree with this line of thinking; it is not realistic.  Some public spending is prudent to address issues in western North Dakota, but there will be less of an appetite for certain projects without some certainty about the future of oil development activity.   The slowdown may be short or it may be very long.  Many of us from western ND remember the 80’s and 90’s.  Cities and counties will be understandably reluctant to build out public utilities to new areas when they do not know when the tax base will be there.

There is also the expectation that private investors will move ahead with housing and commercial projects in order to catch up.  That is not going to happen until after oil development activity resumes.

When it comes to policy and budget decisions we have to be realistic.   Regardless of the duration of current oil prices decision making regarding both public and private spending will be affected.

Environmental Activists

Environmental activists will continue to push for more and more regulation of our energy industry.  Emboldened by success with flaring restrictions and oil conditioning they are moving ahead with new issues such as increased oversight of our regulators in ND, expanded endangered species listings a greater involvement of the EPA in our state.   Policy makers in Bismarck and Washington should push back against these efforts and ensure that we maintain control over the development of our energy resources.

Energy Development

Now is the time to make prudent policy decisions for the long-term.  At the federal level we should repeal the crude oil export ban and modify the Jones Act for crude oil shipment.  At the state level we should join with other energy producing states to maintain state control of our natural resources.  Prudent state-based regulation of our energy industry should be based on facts and science and our energy tax system should be simplified and based on the realities we face in ND.

Blessings to all over the weeks of Holiday adventures, I for one will enjoy all the family time!  For now “talk amongst yourselves”.