Column: Can N.D. handle being rich?Tax Commissioner Cory Fong could hardly restrain his joy when he reported that the oil industry will produce almost twice as much tax revenue as estimated during the last session of the Legislature. Instead of $2 billion for the current biennium, Cory now expects it will be closer to $4 billion.
By: Lloyd Omdahl, Columnist, The Jamestown Sun
Tax Commissioner Cory Fong could hardly restrain his joy when he reported that the oil industry will produce almost twice as much tax revenue as estimated during the last session of the Legislature. Instead of $2 billion for the current biennium, Cory now expects it will be closer to $4 billion.
The sales tax, motor vehicle registration fees and income taxes also demonstrated spectacular gains but they look like loose change compared to the oil money.
With this flood of money into the state treasury, the question must be raised about the ability of North Dakota to handle the challenge of unexpected wealth. One thing for sure, it will change the dialogue in the state Legislature.
Historically, legislators have used a variety of excuses for denying requests for expenditures. With huge budget surpluses in the offing, all of the old excuses will be meaningless.
First, the legislators could usually say “we don’t have the money.” Of course, it was true most of the time because our frontier frugality kept taxes so low that nothing ever accumulated in the treasury. In fact, it was a stretch from one biennium to the next.
If that argument didn’t sell, legislators would say “we can’t spend our citizens’ hard-earned money on that kind of program.” Well, the oil bonanza isn’t the citizens’ hard-earned money. All the hard-working citizens have to do is carry it to the Bank of North Dakota.
Another favorite appropriation stopper was that “everything is committed and there is nothing left for new spending.” Looking at the money glut, Senate Appropriations Committee Chairman Sen. Ray Holmberg, R-Grand Forks, has already begun to spin that yarn. But $2 billion is too much to hide, even for an experienced mattress-stuffer like Holmberg.
Then there was the rainy day argument. Legislators said that we must save for a rainy day because hard times were sure to come back. We have so much money socked away for rainy days that Noah would chuckle at the argument.
We must face the facts. North Dakota is rich and we’ve run out of arguments for not spending it. We have tons of discretionary money and legislators will have to come up with new and better arguments to protect it.
Can North Dakota handle being rich, given the inclination to satisfy the political demands of the moment?
We have already seen a strong inclination to divide the money among the citizens. Legislative interim committees are already talking about using a good chunk of the oil revenue to give everyone in North Dakota a generous tax cut.
A wildlife coalition has filed an initiated measure to dedicate a slush fund of $80 million yearly for a special committee to spend on various conservation and wildlife projects.
If the measure is approved in November, other groups with legitimate demands will go to the public for their share of the money. And if this is going to turn into a money rush, public education is entitled to the lion’s share.
After all, it was the supporters of public education who initiated the measure that doubled the oil tax back in 1980. Without that measure, there would be very little surplus to fight about today. So if spending is going to be a free-for-all, maybe the education people would like to initiate a constitutional amendment taking 40 or 50 percent of the oil revenue.
For the first time in our history, we have the opportunity to do more than stretch budgets from one biennium to the next. We can plan and prioritize for decades into the future, that is, if we can handle being rich.
(Lloyd Omdahl, of Grand Forks, is a former lieutenant governor, state tax commissioner and state budget director)