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City, school fight to receive more oil revenue

Posted 2/02/11 (Wed)

By Tina Foreman
Farmer Staff Writer

Watford City is located smack in the middle of an oil boom, and unless you’ve experienced the good and the bad of it, it’s difficult to understand why city and school district officials are fighting to keep more of the oil tax revenues here in Watford City.
The McKenzie County School District has 75 more students than it did last spring. That’s a great thing for a small school, except when you look at funding.
“Because the school district really has no source of income, we rely on state funding and funding from oil tax revenue,” says Steve Holen, McKenzie County School District No. 1 superintendent. “State funding comes in the form of a per pupil payment based on enrollment numbers from the previous spring. So this year the district received funding for 75 less students than we have now.”
As oil revenue increases, one would expect that the school district’s funding from oil tax revenue would increase. But that’s not the case, not for McKenzie County School District No.1 anyway.
“Last year, the Legislature changed the oil tax cap so that schools, cities and counties would receive more of the revenue,” says Holen. “However, unlike the city and county, once the school hits the cap, the money is put into the County Infrastructure Fund and can only be applied for to purchase buses.”
McKenzie County Public School District No. 1 met the caps a few years ago and has been a capped school ever since.
“Being a capped school, we have been working with a fixed income even though our expenses are going up,” adds Holen. “We are coming to a time when there are some small projects that need to be completed to free up some classroom space for our increasing enrollment. And without additional funding it is difficult to start new projects.”
Holen is hopeful that this year’s legislative session will allow the cap to be increased or allow schools to use the County Infrastructure Fund for things other than buses.
“If we were able to use the County Infrastructure Fund at the discretion of the county, that would really help us out,” states Holen. “We could use those funds for additional teaching staff and projects that we feel are very important.”
The Legislature has already defeated House Bill 1070, a bill that would have relaxed the language of the County Infrastructure Fund so that each county would have discretion over the funds. But Holen still has hope that additional funding will become available with a sister bill to House Bill 1070.
“We are still waiting to see what will happen with the remaining bill,” adds Holen. “It is a real uphill battle, but we are waging it now and I am hopeful that something positive will come out of this legislative session.”
Just as the school district is fighting for oil tax revenue, the city of Watford City is also fighting to get a bigger piece of the pie.
“The city has a cap of $750 per capita,” says Brent Sanford, Watford City mayor. “A bill to do away with the cap has already been defeated with a compromise bill still active. The compromise bill would increase the cap to $1,000 per capita.”
Sanford is hopeful for the increase to $1,000, but he knows that if the oil stays active and the community continues to grow, it won’t be enough.
“If the cap isn’t lifted, our revenue will be flat for the third year in a row,” states Sanford. “We can’t continue to support the current demands for service on the same revenue. The payroll for Watford City city employees has increased by $300,000 alone due to the need for increased city staff. We have been asked to compromise with the cap at $1,000, but that will only allow the city to break even.”
Sanford is concerned that if the caps aren’t lifted the city will be forced to fall behind on some of its maintenance projects which will only cause more expensive problems in the future.
“To not keep up with chip seals on the streets and other maintenance projects will set us up for some difficult decisions to come, and it simply isn’t good city planning,” comments Sanford. “Production tax comes from oil produced right here in McKenzie County. The problem is that we only receive 10 percent of the taxes from it, while the remaining 90 percent goes into the state’s General Fund where the Legislature gives it out to communities throughout the state.”
Sanford is concerned that if the Legislature doesn’t do something with the caps, that there won’t be enough money coming into Watford City for the city to continue the way it has.
“We just can’t continue at this level,” states Sanford. “Without more revenue, we would have to stop paving the streets, and we won’t be able to match any of the projects that need incentives because we will be left without any reserves.”