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Katherine Lymn, Forum News Service, Published February 22 2014

In off year, Oil Patch prepares for next legislative session

DICKINSON, N.D. – In the Oil Patch, a lot can change in a day. When the Legislature reconvenes next January, it will have to address what’s changed in two years.

Legislators say funding for the oil-impacted western region of North Dakota is getting better, but it’s not quite enough to catch up. Growth was more dramatic than many thought it would be when bills were drafted and signed, so next session is a chance to show what has really happened – and what’s needed.

“This oil play, it isn’t the boom of years past,” said Rep. Keith Kempenich, R-Bowman.

“The problem is we keep treating it like that.”

The state’s association for oil counties will likely ask for a special legislative session for this summer. If that doesn’t work, legislators are hoping for a quick infusion of money in the beginning of the regular session.

If counties and cities don’t have an idea of what kind of funding they’ll have right off the bat, they can’t put bids out for projects in time to get construction going for the summer of 2015.

Contractors need to know sooner, Kempenich said.

“They can’t sit till July 1st to see if there’s gonna be something to do,” he said.

Sen. Rich Wardner, R-Dickinson, said getting early funding to western subdivisions to avoid missing the construction season is his top priority.

McKenzie County Commission Chairman Ron Anderson said that since the state has “the pots of money that they’ve stored away,” the west wants some quick additional cash in the first three or four days of the session in January.

Anderson’s county, which includes hub city Watford City, is going to be $75 million short of what it should be doing in 2015, he said.

Roads, which in the patch need to be bigger and stronger to handle trucks, are his top priority.

“If we did put a sum of money out there right off the bat, it would alleviate some of the pressure,” Kempenich said.

Currently, oil-producing political subdivisions get a quarter of oil gross production tax revenue, with the rest going to the state.

But many say they need more.

“It’s inadequate,” said Rep. Kenton Onstad, D-Parshall. “It’s gotta be somewhere between 40 and 60 percent going to the counties, cities, schools.

“As we move forward, No. 1 is we gotta adequately fund the impact and the state, to me, has a major obligation to fund that,” he said.

Anderson said oil counties are “pretty unanimous” that they want 60 percent of the revenue.

Many political subdivisions are reaching their borrowing limit, a problem worsened by a sunset clause in last session’s funding bill.

“The people who do bonds and bankers don’t like sunsets on bills because they take the worst-case scenario that the funding might be cut,” said Rep. Vicky Steiner, R-Dickinson. “So it just doesn’t give us a big enough stream of revenue to deal with the impact.”

Kempenich said one idea is for local governments to tap into existing state funds, or the Bank of North Dakota, for more lending opportunities that would be paid back with oil revenues.

Trying to educate nonwesterners

In the meantime, western counties try to educate those who don’t live in the patch, with the 7 a.m. traffic jams and rutting roads that hurt farm equipment.

“We’re inviting those people out here but, you know, it’s kind of frustrating,” Anderson said, “because spending just one day here or one afternoon doesn’t give you a feel for the craziness that’s going on.”

Kempenich, too, said while the tours help, it’s not the same as living it.

“They’re kind of a visual aid especially, (for) the ones that haven’t been out here before.

“Most of the legislators kinda know the issues, what’s going on …” he said. “I guess the one thing is you almost have to live it to feel the urgency.”

Anderson said he has hosted quite a few nonlegislative groups for tours of Watford City – a group of friends from Fargo visited just out of interest, for example.

Whoever’s touring, the response is surprise.

“They’re absolutely amazed,” Anderson said. “I haven’t found one person that has not said, ‘Wow, we had no idea.’

“I’m hoping that we can make our plight known,” Anderson said. “We’ve been trying to two sessions and we’ll get baby steps.”

In the meantime, counties and cities are left to wonder, and worry.

“What my fear is that as these problems – out in especially the four large oil-producing counties, because they produce 87 percent of the oil – these figures keep compounding, and eventually they’re going to get so large if they’re not taken care of, the Legislature’s going to say, ‘Wow, we can’t do anything about that, it’s just too big,’ “ Anderson said.

“I’m concerned that we would become throwaway counties.”