Murphy’s Law #62

August 20, 2018

Last week I covered the Energy Development and Transmission committee, then the Legislative Revenue Forecast followed by the Policy Summit hosted by the Greater North Dakota Chamber of Commerce. Here is the quick and dirty:
EDTC heard some proposals about how to tax wind so that instead of all going to local governments as it does now, some of that tax will be given to the state. Because the tax was increased last session for new wind farms, as I understand it this will apply only to those wind farms built after 2017 and the locals will not lose out because they will get to keep the percentage share they currently enjoy. The sponsor of this proposal said he hopes this new support of the state will curtail complaints from some that wind was not contributing its fair share. Then the Chairman gave his plan for distributing tax dollars to try to satisfy both oil and non- oil county citizens. There is no doubt both his idea and the wind tax will get a lot of debate and some tweaking if either move forward this coming winter/spring session.
As far as the revenue forecast committee, they heard from some commodity groups and North Dakota Soybean Council Executive Director Stephanie Sinner adeptly explained the situation of the industry at this point. After hearings all day, what I would say to you as a bottom line for our state’s finances is that this session will be a difficult one because we emptied all of our cash buckets last session.
Somewhere, legislators need to figure out how to deal with about an $800 million shortfall. The governor has asked for more cuts on top of those suffered last session. However, you should know that with the nature of the oil play comes the opportunity to smooth out the highs and lows of revenue going forward for many years to come because there are many wells drilled that are being completed and thousands more to drill. Like agricultural commodities, oil prices are volatile, but the current $60-$70 per barrel makes for a happy North Dakota and our income is proceeding above forecasts. Efficiencies in mining oil and gas have led to profitability at even lower prices and our legislative leaders see less difficulty keeping our budget problems at bay after this coming session. Of the topics covered at the Chamber’s policy summit, this was addressed as well as a panel discussing what to do with the Legacy Fund which is still untapped as it approaches $6 billion. It sounds like that is about to change with a proposal to use some of it for a revolving loan fund for large state infrastructure projects. We will know more at the end of April next year.
Also discussed were the Ethics Measure on our fall ballot (deeply divided panel) and a discussion on how our labor shortage in North Dakota is holding back our economy. This Sunday’s rain finally hit us here in Traill County and I wish you all the best heading down the homestretch to harvest