James MacPherson, Associated Press , Published April 07 2013
North Dakota Legislature this week: Oil taxes in focusBISMARCK – In the waning weeks of the North Dakota Legislature, conference committees are hard at work reconciling differing versions of bills that have been endorsed in the other chamber.
The bulk of the Legislature’s time will be taken up over the next few weeks by such meetings. Once agreements are met, the legislation is kicked back to the full Senate and House for approval.
The North Dakota Constitution limits the Legislature to 80 days of meetings every two years. The 2013 session will hit its 62nd day on Monday.
Still ahead are big topics, including oil taxes, a tribal agreement and an unsigned abortion bill:
Oil tax trust fund
North Dakota’s oil tax “Legacy Fund” could hit $1 billion this month and a state board now is recommending that half of the fund’s assets be shifted to the stock market and other investments.
North Dakota voters approved the fund in 2010 and it’s been rising faster than predicted with booming oil production. None of the money can be spent until 2017, and even then it takes a two-thirds vote of the Legislature to get into it.
March deposits were about $87 million, bringing the fund’s total to $927 million, according to Darren Schulz, the interim chief investment officer of North Dakota’s Retirement and Investment Office.
Oil revenue began gushing into the fund in September 2011 and analysts initially estimated it would have a $618 million balance when the state’s current two-year budget period ends on June 30.
Revenue from the fund has been invested mostly in short-term, low-risk and low-return U.S bonds, guaranteed by government agencies, Schulz said. But annual earnings from the fund, about 1.6 percent last year, is barely keeping pace with inflation, he said.
The seven-member Legacy Fund advisory board, created by the Legislature, now wants to build on the fund with a broader investment policy by placing 50 percent of the money in stocks and other types of investments.
The new strategy is estimated to bring an annual return of 6.35 percent, but will still be in line with the state’s conservative investment policy, North Dakota Treasurer Kelly Schmidt said.
“This allocation will give the fund an opportunity to preserve principle for future generations and maintain purchasing power,” she said.
North Dakota’s Investment Board, which supervises the Retirement and Investment Office and oversees state and local government employee pension funds, is expected to adopt the Legacy Fund advisory board’s recommendation later this month.
Oil taxes and tribal agreement
A North Dakota Senate committee has reworked a House bill aimed at restructuring oil taxes.
The edited measure by the Senate Finance and Taxation Committee would close the so-called stripper well loophole that’s costing the state millions of dollars in lost revenue annually. And it would give the Three Affiliated Tribes a greater share of the taxes collected from reservation oil production.
The Senate approved amendments to the bill Friday and it now heads to the chamber’s Appropriation Committee. It ultimately will go back to the House for consideration.
The measure does not offer overall tax cuts for drillers as in past proposals in exchange for closing the stripper well loophole, said Sen. Dwight Cook, R-Mandan, who chairs the committee.
The reworked tax structure also does not remove price triggers that would lessen state taxes for companies if the price of oil falls below a certain level. The concept, adopted in the 1980s during a time of depressed oil prices, adjusts the state’s oil extraction tax based on a five-month average price if a barrel falls below a certain price.
The so-called trigger price currently is set at $52 a barrel and the state could see tax revenue decrease by at least $2 billion if oil falls below the current price trigger.
The proposed tax framework also would modify a revenue sharing agreement that the state has had with the Three Affiliated Tribes since 2008. The agreement limits oil tax rates on Fort Berthold Reservation land, and spells out how the state and tribal governments will share oil revenues. Its goal when crafted was to enhance oil and gas exploration on the reservation.
The Fort Berthold reservation is in the heart of North Dakota’s booming oil country. Drilling has skyrocketed since the original agreement was signed and tax collections have been in the hundreds of millions dollars, with the state pocketing the bulk of the revenue. The state’s share is divided among counties, cities, school districts and a number of state funds and programs.
The tribes’ chairman, Tex Hall, has told lawmakers the agreement should be reworked to provide more revenue to maintain the tribes’ own road network, which is used by heavy trucks that have accompanied increased oil drilling on the reservation.
North Dakota’s House is sitting on a bill that would outlaw abortions after 20 weeks of pregnancy based on the disputed premise that at that point a fetus can feel pain.
Gov. Jack Dalrymple was out of state late last week and House Republican majority leader Al Carlson of Fargo said the chamber wanted to wait for the governor’s return before acting on the bill – again.
North Dakota lawmakers negotiating final details of the anti-abortion measure killed a House amendment to a Senate bill last week that threatened a three-year, $1.2 million federal sex education grant for North Dakota State University.
A conference committee of three House members and three senators voted unanimously to delete the amendment from a Senate measure, which is a challenge to the 1973 U.S. Supreme Court ruling that legalized abortion up until viability, usually at 22 to 24 weeks.
Dalrymple already has signed into law this session the nation’s strictest restriction on abortion – a measure that bans the practice when a heartbeat can be detected, as early as six weeks into a pregnancy. He signed two other measures banning abortions because a fetus has genetic defects such as Down syndrome and requiring that doctors who perform abortions be physicians with hospital-admitting privileges.
Dalrymple already has hinted that he will sign the so-called fetal pain bill. He’s expected back this week.