State’s reserves will define Legislature

2012-06-25T02:00:00Z State’s reserves will define LegislatureTribune editorial Bismarck Tribune
June 25, 2012 2:00 am  • 

The oil boom in western North Dakota, along with higher than expected sales and income tax collections, are beefing up North Dakota state government’s financial reserves. Expectations are that by June 30, 2013, the state will be sitting on a $2 billion nest egg. It means that that the Legislature that begins meeting in January will have the resources on hand to meet challenges that face the state, certainly in terms of investing in infrastructure, but also in replacing federal funding that’s expected to dry up when Congress faces deficit and debt reduction.

Spending by state government has gone up significantly in the last several sessions. A great share of that spending has gone to infrastructure, education and deferred maintenance of state buildings and facilities. That spending has not come at the expense of any state deficit or debt. The North Dakota Legislature, a conservative body by any estimation, has been reasonable in its spending.

Compared to the situation many states find themselves in, North Dakota is the land of milk and honey or, rather, the land of crude oil and natural gas. Make no mistake, it’s also the land of small grains, beans, corn and livestock.

In addition to last week’s projections of a very healthy state reserve, another news story noted that the state’s capacity to ship crude oil to market by rail had increased 50 percent, as two new crude-to-rail terminals went on line.

The increased expectations for state tax revenues are directly related to improvements in infrastructure like these train-loading facilities. It’s one thing to have the oil production, but if the infrastructure isn’t in place to get it to market, what is it worth in dollars and cents? It’s the same motivation behind the recent development of grain elevators capable of feeding 100-car unit trains to move the state’s harvest to mills for processing and harbors for export.

It’s this infrastructure, whether private in terms of rail or pipeline, or public in terms of roads and bridges, that’s key to the economic model that North Dakota is presently operating under. It will be a big part of what the Legislature must grapple with in January. And these projections of very strong reserves raise citizen expectations for tax relief and a desire to invest in the future of the state.

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(9) Comments

  1. Report Abuse
    - July 11, 2012 8:48 am

    I was not born here, a situation over which I had no control, but have lived here 34 years now, more than half my life. I did not leave for the bright lights or any other inducement, but migrated here by choice. Guess I would not be eligible.
  2. Zen
    Report Abuse
    Zen - July 01, 2012 4:56 pm
    ND owns minerals on roughly 2 out of every 36 sections of land in ND? Not true. Just remember that the Bank of North Dakota foreclosed mortgages of thousands of landowners in the 1930's. That land was resold and tens of thousands of minerals were reserved by the Bank of North Dakota. We're talking hundreds of millions of dollars in oil and gas lease bonuses and royalties.

    The state is also raking in hundreds of millions in production taxes. The money should be spent sensibly with future generations in mind not like our federal government whose appetite for tax dollars is only exceeded by the ridiculous waste of the same.
  3. Just Curious
    Report Abuse
    Just Curious - June 29, 2012 9:11 am
    As the State only owns the minerals on roughly 2 out of every 36 sections of land in ND (that's a little conservative as it doesn't include lands owned by ND Game and Fish), most of that oil money is derived from taxes on fellow North Dakotans who pay roughly 15% into the State between oil extraction taxes and income tax. Contrast this scenario with that of Alaska where the vast majority of their revenue is derived from royalties on state owned land and you quickly come to the conclusion that those who pay this onerous tax will not be happy about it being handed out to someone else as a direct check. Most beneficiaries of oil royalties in ND begrudgingly accept the taxes as a means of helping support the local infrastructure and State needs, I don't know a single one of them that is very happy with their tax money being doled out to you, or anyone else.
  4. State Resident
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    State Resident - June 27, 2012 7:05 am
    I agree with WeThePeople. If Alaska has a formula, surely ND can copy or develop a similar plan for the ND residents. After all, everyone in the state is being affected by this development and should be compensated.
  5. Cheetos
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    Cheetos - June 26, 2012 9:14 pm
    You definitely got that right Marvin! King Al will find a way to spend all that money in the eastern part of the state!
  6. Marvin51
    Report Abuse
    Marvin51 - June 26, 2012 7:21 am
    Everyone can have all the ideas they want but it only matters what Al Carlson wants to do.
  7. sehr windig
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    sehr windig - June 25, 2012 11:54 pm
    Just as a reminder what North Dakota was like's a National Geographic article detailing the decline of western ND:

    Read that (and the one mention of oil)...and remember that that was 4 years ago. The boom came that fast, and it can leave that fast. Let's not squander, but invest-

    example: Build railroad infrastructure over pipelines because pipelines haul one material one way. no oil = all gone.
  8. Report Abuse
    - June 25, 2012 9:59 pm
    This editorial is right on. North Dakota has never had the opportunity it has now to invest in this state's future. Infrastructure is at the top of the list, as it should be. The state also has the resources to respond to impacts such as burdens on homeowners, and renters. who are suffering from the prosperity of others.

    Tax relief needs to be on the agenda. In all of this, let us hope legislators do not miss the opportunity they have to make this state a magnet for the best and brightest people in our country, and that means investing in higher education and providing incentives for the best and brightest in other states and countries to come to North Dakota.
  9. WeThePeople
    Report Abuse
    WeThePeople - June 25, 2012 8:56 am
    I think that each native born North Dakota Citizen, who is still living in North Dakota, should get a payment each year, similar to what the Alaska Permanent Fund provides its citizens.

    In 2008 the Alaska payment was $3800 but the average is between $900-1800.

    I believe we can do better for the citizens of North Dakota, who have faithfully stuck it out here and didn’t leave our state for the bright lights of other areas of our nation.
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