The North Dakota Senate opted Monday to keep a provision in oil tax policy that requires companies to pay more taxes when oil prices rise, reversing course from a committee recommendation made earlier this week.
The topic came up during discussion for Senate Bill 2312, an effort to resolve a dispute with the Mandan, Hidatsa and Arikara Nation over how oil tax revenue is shared.
On Monday, the Senate Finance and Taxation Committee recommended to remove a so-called trigger from the state’s tax policy that increases the oil tax from 10 percent to 11 percent if West Texas Intermediate prices reach $90 for three consecutive months.
But on Wednesday, members of the committee said they no longer think removing the trigger is the right move after continued discussions on the state-tribal oil tax agreement.
“What’s a good idea one day as this negotiation continues can become a challenge the next day,” said Sen. Dwight Cook, R-Mandan, chairman of the committee.
Also Wednesday, members of the Senate amended the bill to extend the work of the Tribal Taxation Committee led by Gov. Doug Burgum for the 2019-20 interim. The committee is asked to study several issues, including how to handle oil tax revenue from wells that cross the boundary of a reservation.
The bill, which is being closely watched by the oil industry, has been referred back to the Senate Appropriations Committee. It’s estimated to reduce state oil tax revenue by $33 million in 2019-21 by shifting that amount to the tribe. However, supporters of the compromise say establishing certainty with oil tax policy at Fort Berthold will lead to increased industry investment, benefiting both the state and the tribe.