Posted 12/12/12 (Wed)
By Kate Ruggles
Farmer Staff Writer
Watford City and McKenzie County officials feel they are being slighted in state funding when it comes to the energy impacts the area is facing.
And that message rang out strongly during a legislative forum with North Dakota State Representatives Dave Drovdal and Keith Kempenich, and State Senator Bill Bowman.
With the release of Gov. Dalrymple’s 2013-2015 budget, Watford City Mayor Brent Sanford and McKenzie County Commissioner Roger Chinn expressed two major concerns with the state’s plan regarding U.S. Highway 85. Why hold the energy impact and county road funding at the same levels as last session? And what is the North Dakota Department of Transportation’s (DOT) plan for the highway from the Theodore Roosevelt Park North Unit to Killdeer?
“After reading that the governor planned to hold the road fund amounts steady after the last session, I was in disbelief. I don’t know about other oil-impacted counties, but our road needs are not the same as they were two years ago,” Sanford stated.
“The tough part is that the state and the DOT don’t believe that we have an issue until it is already here,” stated Chinn. “The state’s plan to four-lane U.S. Highway 85 between Williston and Watford City is great, but south of Watford City to Belfield needs attention as well.”
“It is the main artery for anyone traveling north,” Chinn continued. “The last figures reported 11,000 vehicles traveling north to Williston daily, but there are also 8,000 heading south to the junction of U.S. Highway 85 and N.D. Highway 200.”
In addition to frustrations over road dealings, area leaders wondered why the Legislature and the governor’s office are content with providing impacted municipalities with less than 30 percent of the oil taxes?
“The western North Dakota and North Dakota Oil and Gas Producing Counties’ Vision West project has compared oil tax distributions of neighboring states. Montana and Wyoming are in the range of 30 to 35 percent of the gross production tax being sent back to the impacted counties, schools and cities. North Dakota is currently in the seven percent range,” stated Sanford. “The governor’s bill to increase the tail-end bracket of the oil gross production tax distribution formula from 10 percent to 25 percent effectively brings us closer to receiving 11 percent, with the one-time impact funding bringing us into the 15 to 17 percent range. So why are we receiving half or less of the funding that other states would be providing?”
However, more than poor reactivity and low tax distribution percentages, there is a bigger issue that area leaders would like to see resolved.
According to Chinn and Sanford, an outdated mentality and an incorrect perception of wealth is preventing the State Legislature from meeting the demands of oil-impacted counties properly.
“Four counties are producing the oil, but they didn’t get what they needed because the state wanted to be fair to the other counties,” Chinn stated. “There is a perception of wealth that the rest of the state has concerning western North Dakota, but what they don’t understand is the oil companies are making a ton of money and it isn’t trickling down to the surrounding area. The schools get nothing, the park districts get almost nothing and the hospitals get bad debt.”
Additionally, Gene Veeder, McKenzie County’s director of Economic Development, states that outdated methodologies have tied oil-impacted western North Dakota’s hands, forcing them to compete with their neighbors for impact grants and making them wait for grant request approvals to complete needed projects. Then once the funds have been granted, they still have to enter an unproductive study and bidding process to get those jobs done, wasting still more time and money.
“As it is now, when we bid a project, we are forced to accept the low bidder, who is sometimes an out-of-state contractor unfamiliar with North Dakota’s weather and terrain or how to do business in an oil field-impacted economy. In four instances already, contractors have left projects unfinished for these very reasons, costing us time and money to re-bid the project and start the process all over again,” Veeder stated as he urged the representatives to push the state into considering alternate, more efficient ways of getting things done.
Another issue along the lines of an outdated mentality arose from Superintendent Steve Holen and McKenzie County Healthcare Systems CEO Dan Kelly, who told the legislative representatives that the State Legislature needed to start seeing schools and hospitals as important infrastructure that requires funding as much as roads, cities and counties do.
“When people choose to move to a new community, they look at schools and health care,” stated Kelly. “Right now our health care facility is physically taxed, as are the facilities all over oil-impacted counties. Our facility was built during a time when we saw 15 emergency room visits a month. Now we are seeing over 500.”
As an option, Kelly brought up an idea for the state to consider providing oil-impacted health care systems with low interest loans from oil reserve money.
“We are looking at needing to build a new facility at a time when we are financially hurting and your support of an initiative for health care systems to have access to low interest dollars would be very helpful,” Kelly states.
Holen, too, wants schools to be seen as infrastructure, but for a different reason.
“Please put us back into the production tax formula, if you really like property tax relief,” stated Holen in reference to the governor’s plan for lowering property taxes across the state.
According to Holen, part of the state’s plan is to buy down mills, and the last time that happened, McKenzie County got burned. Holen feels that reducing mills is unfair if the state refuses to take taxable valuations and current mill levies into consideration. And, because of the cap on levy increases, the property tax reduction effort could wind up treating oil-impacted counties, like McKenzie County, unfairly, as was the case last time.
“School districts need to be able to react to the changes being implemented at the county and city levels,” stated Holen. “Our financial needs to address growth have to be reflected in the production tax formula in an adequate manner to maintain a high quality level of education in our community.”
Finally, the issue of conservation arose as a matter of importance to area leaders, who called for reduced flaring and regulations requiring more wells to be drilled on multiple well pads.
All in all, the District 39 Legislators not only heard area leaders, but agreed with their perspectives.
“If production is going to be at one million barrels per day, we don’t want to keep revisiting these issues. We want to get it right,” stated Kempenich. “But it is frustrating because we have to work with the rest of the state.”
Kempenich, Drovdal and Bowman agree that there is a mentality to be overcome by representatives from areas not impacted by the oil industry.
“This next session will be a tough one because money brings out the worst in people, but we want to address these issues the best we can so you don’t become overrun.”
The 63rd session of the North Dakota Legislative Branch convenes Tuesday, Jan. 8, 2013. There, Representatives Drovdal, Kempenich and Senator Bowman will put their best foot forward as they strive to represent McKenzie County’s impact needs to the rest of the state.