Belter: Extraction tax exemption a ‘poor idea’

BISMARCK — Legislation providing a tax exemption for oil companies who have their oil refined in North Dakota got a cool reception Monday.

House Bill 1032 was drafted to create an incentive for oil companies to build a refinery in North Dakota by exempting them from paying the state a 6.5 percent extraction fee oil companies currently have to pay.

Bill Shalhoob, a registered lobbyist for the Greater North Dakota Chamber of Commerce, told the House Finance and Taxation Committee the bill doesn’t make sense since federal regulations are the biggest obstacle to building a refinery.

“The problem with refineries is not in tax code, it’s in the environmentals,” he said.

He also pointed out the bill would cost taxpayers $258 million.

There is one oil refinery in North Dakota, at Mandan, with others proposed near New Town and Williston.

Committee Chairman Rep. Wes Belter, R-Fargo, doesn’t expect the bill to get very far in the Legislature.

“I think it’s a poor idea,” he said. “It’s unworkable and doesn’t make sense.”

No committee action was taken on the bill.

Legacy Fund

North Dakotans have many ideas for the state’s Legacy Fund, and one state legislator wants to study them.

Sen. Dwight Cook, R-Mandan, sponsored Senate Bill 2124 which was first heard in the Senate Industry, Business and Labor Committee on Monday morning. The bill will study methods during the 2014 interim session of the Legislature that would assure the fund provides the lasting benefits intended by North Dakota voters.

The fund was created after voters supported the 2010 statewide Constitutional amendment that invested 30 percent of the state’s oil revenues into the fund, which cannot be spent until 2017. Even then, the legislature has to have a two-thirds vote by the House and Senate to spend $15 million of the fund.

The fund currently has about $1.2 billion and is projected to take in another $1.76 billion over the 2013-2015 biennium, totalling nearly $3 billion.

“We need to start thinking of a program that will be here for future generations,” Cook said. “Right now, we need to take in all the ideas and create a formula.”

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