Dem-NPL legislators: New cost projections of GOP oil tax cut “stunning”

(BISMARCK, N.D.) – At a press conference today, Dem-NPL legislators called recent calculations on the cost of the oil extraction tax cut proposed by the GOP legislative majority “stunning.” The projections, compiled by the North Dakota Tax Department, predict the reduction of the oil extraction tax contained in SB 2336 would cost the people of North Dakota $1.32 billion in the first five years alone.

“These new numbers, which are unquestionably conservative, really lay bare the radical and reckless nature of the GOP’s oil tax plan,” said Senate Dem-NPL Leader Mac Schneider, D-Grand Forks. “The billions in lost revenue under this bill should be used to improve infrastructure, address oil impacts, and continue property tax relief. That the majority would have these priorities shelved in favor of a sharp reduction in the extraction tax is stunning.”

On January 31st, 2013 Democratic lawmakers brought forth a Legislative Council memo that showed the 31% reduction in the oil extraction tax (from 6.5% to 4.5% for new wells drilled in 2017) proposed in SB 2336 would lead to $595 million in reduced revenues in the first five years of its existence. This initial projection was based on data from the Department of Mineral Resources, which assumed daily production for these new wells would be approximately 50 barrels of oil per day.

The $1.3 billion reduction projected under the Tax Department’s calculations rest on an assumption that new wells will produce 200 barrels per day. Though the resulting $1.3 billion five-year loss is dramatic, the 200 barrel-per-day estimate itself almost certainly understates the actual cost to North Dakota.

For instance, Senator George Sinner, D-Fargo, highlighted a chart from the Department of Mineral Resources which demonstrates that new Bakken wells initially produce 1,016 bbls per day with an average decline in production of 65% in year one, 30% in year two, 22% in year three, 19% in year four, 16% in year five and 10% per year thereafter. Under this scenario, the people of North Dakota stand to lose $3.7 billion over the coming half decade under the GOP oil extraction tax cut.

“The GOP majority has yet to be frank with the people about the actual cost of the oil extraction tax cut, but we know for a fact the reduction in revenue quickly adds up to billions upon billions dollars,” said Sinner.

Representative Kenton Onstad, D-Parshall stated that the oil extraction tax cut should be scrapped in favor of a renewed focus on addressing the needs of oil-impacted communities this session.

“Mountrail County alone has stated they need approximately $600 million to address oil and gas impacts and basic operating costs over the next decade,” Onstad said. “You have to ask: Why? Why are Republican lawmakers insisting on going forward with a sharp reduction in the extraction tax when the focus this session should be on assisting our communities?”

SB 2336 is scheduled to be heard in the House Finance and Taxation Committee Tuesday, March 19that 9:00 a.m.

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TaxTriangle-OilExtractionTax

Revenue Impact Charts – LynnHelmsbblsProjections

Revenue Loss Line Graph – LynnHelmsbblsProjections

 

4 thoughts on “Dem-NPL legislators: New cost projections of GOP oil tax cut “stunning”

  1. Pity the property owners who will continue to pay higher property taxes to benefit big oil. Pity those who do not benefit from the oil boom and contiue to pay sale and use taxes that should be reduced. Pity the average joe working person at a store or gas station in ND who pays higher than needed income taxes.

    Oh that’s right — these are the people who hung in there and built the state before the various “energy booms” — that were sold out to the energy companies by Republicans WHO ARE TO DAMNED STUPID TO VOTE FOR THEIR OWN BEST INTERESTS!!!

    Question — is the fact that these morons are owned by energy corporations a genetic thing? It has been going on that long!!!

    God Bless North Dakota. REAL North Dakotans need all the blessings they can get.

    • Thats what happens when the majority elect tea billies to run the state. It’s getting to be a redneck state like some of the south.

  2. yeah…I’m sure the Dems are really concerned about bring tax relief to a majority of North Dakotans……they just want that tax revenue to be spent in other government areas.

    • Hey Johnny, got the guts to tell us your last name? You are a bigger fool than all the ‘Pub legislators put together. At least if it is taxed, the revenue would be spent on NORTH DAKOTANS. Halliburton, Baker-Hughes, Continental, XTO, and other big dogs are not building $50,000,000 facilities in Dickinson, because they are going broke.
      They will not “pull out” as the legislature claims. Too much invested in facilities and leases. Anything given to them, is taken away from US as ND citizens. Property tax abayence and income tax relief have already been given to out-of-state interests. Why shouldn’t we be entitled to the same? Take your ignorance back into your dark, dank, Teabilly spider-hole, you’re too dense to see the light.