Oil tax revenue almost doubles expectations in N.D.BISMARCK — North Dakota collected almost $1.7 billion in oil tax revenue in the past fiscal year, nearly bringing in as much money in one year as the state expected to collect in two.
By: Teri Finneman, Forum Communications , The Jamestown Sun
BISMARCK — North Dakota collected almost $1.7 billion in oil tax revenue in the past fiscal year, nearly bringing in as much money in one year as the state expected to collect in two.
The original forecast from February 2011 predicted North Dakota would collect $2.041 billion in oil extraction and gross production taxes during the entire 2011-13 biennium.
The state is now on track to bring in between $3.5 billion and $4 billion, Tax Commissioner Cory Fong said Friday.
“It’s astounding. It’s significant,” Fong said of the state’s prosperity. “It’s been, in some cases, challenging to forecast what’s going to happen going forward.”
The original forecast predicted oil production would range between 390,000 and 425,000 barrels per day, Fong said. In May, the state averaged 639,277 barrels per day, according to the state Department of Mineral Resources.
“The price (of oil) hasn’t changed much from what we anticipated,” said Senate Appropriations Chairman Ray Holmberg, R-Grand Forks. “It is the production that is going through the roof … clearly the Bakken has taken off.”
The oil industry pays a 6.5 percent extraction tax and a 5 percent gross production tax to the state.
Ten years ago, North Dakota “only” brought in $119.5 million in oil tax revenue for the entire 2001-03 biennium.
Even as recently as fiscal year 2010, North Dakota was just at $582.6 million in oil revenue, about one-third of the nearly $1.7 billion from this past year.
But before North Dakotans start dreaming about how to spend all the extra cash, the reality is most of this money is already tied up.
“So even though this number grows exponentially … it’s not $1.6 billion of accessible money,” Holmberg said.
Nearly $290 million goes back to the oil-producing counties and Three Affiliated Tribes to help with oil impacts.
Another $765 million is tied up in funds with specific rules about how money can be spent, including the $446 million in the Legacy Fund. The voter-approved fund collects 30 percent of oil tax revenue, and none of the money can be spent until 2017.
That leaves the $341.8 million in property tax relief that will go out statewide and the $259 million in general fund money that legislators can spend on any state appropriation. The general fund will reach its $300 million cap in oil tax revenue shortly.
Just like the money collected this past year, additional revenue in the coming year will go through the same state formula that whittles money into assorted funds with specific rules on how that money can be spent.
Rep. Shirley Meyer, D-Dickinson, would like to see lawmakers make some changes to these rules during the next legislative session, particularly how much money goes back to the oil-producing counties.
She pointed to the $118 million in direct distributions to oil cities and counties compared to the $1.66 billion in overall revenue.
“It (the $118 million) is absolutely not enough money to deal with our infrastructure and our needs out there if we want to continue this development,” she said. “We have to invest these dollars right now so we can have a more sustainable infrastructure, and it’s going to take money to do it.”
Oil taxes aren’t the only revenue blowing past state projections.
North Dakota collected $1 billion in sales taxes in the past fiscal year, nearly $365 million more than expected.
Motor vehicle excise taxes also exceeded expectations with $122 million in revenue, or $32.8 million more than anticipated.
Individual and corporate income tax revenue reached nearly $630 million, or $300 million more than the April 2011 forecast.
There’s a common assumption that the state’s success is due strictly to oil, but there’s economic growth across the state, Fong said.
“Without a doubt, oil and oil production is having a significant impact on our economy, but for the most part, we’re seeing other industry sectors doing very well,” he said.
Later this month, the Office of Management and Budget is planning to release an updated forecast for the last year of this biennium and a preliminary forecast for the 2013-15 biennium.
Teri Finneman is a multimedia reporter for Forum Communications Co.