Dem-NPL legislators: GOP oil tax cut a “thoughtless, unnecessary shortchanging of North Dakota’s future”

(BISMARCK, N.D.) – Dem-NPL lawmakers today spoke out against a move by the GOP majority in the North Dakota Legislature to cut the state’s oil extraction tax by 8%. The lawmakers’ actions come on the heels of a vote yesterday by GOP conferees on House Bill 1234 to permanently lower the oil extraction tax from 6.5% to 6%, which the North Dakota Tax Department predicts will cost the state approximately $280 million in the first four years alone.

“The way the majority is cavalierly moving forward with a cut to the extraction tax that will cost the state hundreds of millions of dollars really represents a thoughtless and unnecessary shortchanging of North Dakota’s future,” said Senate Dem-NPL Leader Mac Schneider, D-Grand Forks. “That the majority would do this on day 77 of an 80 day session with no hearing or meaningful opportunity for public input smacks of arrogance. There is simply no valid public purpose served by the Republican cut to the extraction tax.”

Interestingly, the vote by the GOP conferees to cut the extraction tax came on the same day that the U.S. Geological Survey announced there is nearly twice as much recoverable oil in the Williston Basin than was thought just five years ago.

“Yesterday’s projections are further affirmation that the oil companies are not going anywhere,” Senator Connie Triplett, D-Grand Forks said. “A rational tax policy would cut taxes to provide an incentive for corporate behavior. No incentive is needed to encourage continued drilling in the Bakken/Three Forks. So long as the world price of oil remains high enough to justify the cost of drilling in the Bakken, the drilling will continue.

Previously in the session, SB 2336 proposed to lower the oil extraction tax by 30%. That plan was soundly defeated in the ND House by a vote of 6-87. During debate on the issue several groups stated that they intended to challenge the reduction through the initiated measure process.

“There is little doubt in our minds that this bill will be challenged by the people,” Representative Scot Kelsh, D-Fargo, said. “The overwhelming message from North Dakotans is property tax relief. Imagine the relief possible if we do not sign away millions each year through this unnecessary reduction.”

Furthermore, this extraction tax rate sits inside of an integral bill to the state of North Dakota. HB 1234, addresses closing the stripper property loophole, sets the trigger price and has a reporting-only requirement for infrastructure expenditures between the state and the Three Affiliated Tribes.

“It is downright shameful for our fellow legislators to put a needed bill and policy in jeopardy in order to pass through a reduction that has been widely criticized,” Representative Kenton Onstad, D-Parshall, said. “The relationship this legislature holds with the tribes is more important than an extraction cut. In fact, we as a body should have more respect for our friends, the Three Affiliated Tribes than to put this relationship in jeopardy.”

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