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Lloyd Omdahl, Published January 24 2012

Oil boom requires balance

We welcome the development in the North Dakota Oil Patch and celebrate the benefits that will enrich mineral owners, landlords, community businesses, oil companies and the state treasury. However, the negative unexpected consequences of the rapid development are becoming too serious to ignore.

Intoxicated by the prosperity of the oil boom, we have ignored two major trends as we have been running gleefully to the bank with the proceeds. The first is the crushing load being placed on the infrastructure; the second is the undermining of the legislative process.

Practically unregulated and moving at break-neck speed, the development is overtaxing the infrastructure throughout the Oil Patch. Public services are being stretched beyond capacity.

Highways are being destroyed faster than they can be rebuilt; heavy oil traffic is shoving other users off the roads; schools are rushing to accommodate over-enrollment; housing, much of it inadequate, is in short supply; crime is mounting; county social services are being impacted, and environmental concerns are being shoved under the rug.

The oil has been here for millions of years. It isn’t going to evaporate next week, so there is no justification for the development panic that is gripping the state. Some local leaders have become alarmed at the destruction and are calling for slowing down the runaway industry by reducing the number of drilling permits being issued.

This can be done without disrupting the industry. Areas suffering excessive damage could be declared disaster regions, and drilling permits in these areas limited until the consequences can be brought under control. In fringe areas with manageable development, the issuance of drilling permits could be continued without concern.

Not only is the oil boom destroying some of our physical plant, but it is also threatening the legislative process.

The flow of oil revenue into the state treasury has been so dazzling that some interest groups are trying to get a hog’s share of the money.

First, there is the measure that would summarily end the local property tax and mandate replacement funding of local governments by the state to a tune of $700 million annually. This measure would not be on the table without the presence of oil money.

The sponsors have been claiming that the state will not have to reimburse the local governments with tax money, but Section 4 of the proposal leaves no doubt that the Legislature would be required to fund the revenue loss at the local level. Oil money would be needed to fund this proposal.

Wildlife and environmental interests are proposing a constitutional amendment that would divert another $40 million annually out of the state treasury for a raft of projects enumerated in the proposal. The problem with both of these measures is that they would lock up large sums of money without regard to the other priorities of the state.

They are being proposed for a vote of the people because the sponsors feel that they don’t have a good enough case to convince the Legislature that their proposals ought to have priority over money for highways, state school aid, Medicaid, higher education and other state programs.

These efforts to lock certain revenues in the constitution would impair the ability of the Legislature to balance all of the state’s needs or to respond to unexpected emergencies, such as the major flooding experienced by Bismarck, Minot, Fargo and Devils Lake in 2011.

Both of these proposals belong in the legislative process, where all of the state’s priorities can be thoroughly discussed and balanced.

We not only need to save the infrastructure in the Oil Patch, but we must also balance all needs when it comes to allocating the state’s newfound wealth.


Omdahl is a former North Dakota lieutenant governor and a retired University of North Dakota political science teacher. Email ndmatters@q.com.