Posted 9/09/14 (Tue)
By Neal A. Shipman
North Dakota is the envy of every other state in the nation. Our state has the lowest unemployment rate in the country with thousands of good-paying jobs waiting to be filled thanks in a very large part to a booming economy created by the oil industry in western North Dakota. While the exploration and drilling of the oil industry is being felt the hardest in a very few North Dakota counties, such as McKenzie, the positive impacts are being felt statewide.
While virtually every other state would like to be sitting on top of the Bakken and Three Forks oil formations and be able to capture even a small share of this economic buzz, what no doubt has governors and legislators in other states drooling over is North Dakota’s balance sheet. In February, just six short months ago, the people responsible for putting together North Dakota’s revenue forecast projected that the state’s budget surplus this year would be $457 million by next June. And now, just two weeks ago, the bean counters retooled their pencils and are now saying North Dakota will have a $614 million surplus by that date. That means that they only missed the state’s revenue inflow by $157 million.
Obviously, with that kind of money just sitting in the Bank of North Dakota or being invested in the financial markets where it will grow to be an even larger amount, there are a lot of people and groups in North Dakota who have ideas on ways to spend the money. The state’s colleges and universities are already lining up their support of hundreds of millions of dollars in buildings and programs to serve fewer and fewer students that are enrolling in our colleges. And, of course, there is that initiated measure that wants to take five percent of the state’s oil revenues to buy up land in North Dakota for more parks and wildlife areas.
North Dakota now has the financial ability to accomplish virtually anything that it wants to do. We’ve created all of the “rainy day funds” that we will need. So the question is - what should the state of North Dakota do with some of the surplus funds that it has sitting in the bank?
One idea, which I believe, has a lot of merit is to give every man, women and child who is a resident of North Dakota an oil and gas dividend if they have lived in the state for a year. The state of Alaska has done just that for years using a portion of its oil wealth. Quite simply, the state would be returning a portion of the money that it is receiving back to its citizens. And after all, at the end of the day, the surplus funds belong to the taxpayers and not to the government.
There are a couple of benefits to such a direct return of state funds to the state’s residents.
First, a direct payment may ease the apparent need of the North Dakota Legislature to keep reducing the state’s property taxes. In reality, the state doesn’t get the taxes that are collected on property. But property taxes are huge when it comes to funding local governments and local schools. So every time the Legislature decides to lower property taxes, it forces the local government and schools to raise their mill levies and local taxes. The end result is the state can claim they are the “good guys” and then throw local government under the bus.
The second reason that I believe an oil and gas dividend to the residents of the state is a good idea is that it would require people living and working in the North Dakota to become a state resident in order to qualify for the money. For some areas of the state (think the oil patch), the number of people who are living and working here yet who claim an out-of-state residence is staggeringly high. That means that these individuals will never be able to be counted in a state census, not be able to vote because they don’t have a valid North Dakota driver’s license, and will probably never register their vehicle in the state. Having all of our workers become residents is not only important to the state, but also to the cities and towns in which they live.
Granted, it would require the North Dakota Legislature to change the state’s constitution in order to do what the state of Alaska is doing when it comes to sharing the wealth. But giving some money back to every state resident may not be a bad idea to explore. It would be just another example of why North Dakota is a great place to live and work.