North Dakota considers special session on oil country growth

February 27
An oil train rail depot in New Town, ND where locally drilled oil is put on trucks and then rail to be shipped to refineries. (Photo by Michael S. Williamson/The Washington Post
An oil train rail depot in New Town, N.D. where locally drilled oil is put on trucks and then rail to be shipped to refineries. (Photo by Michael S. Williamson/The Washington Post

How fast are the communities surrounding the Bakken oil field expanding? So fast that local governments can’t keep up.

The rapid growth of oil production and the new population influx means cities and counties — some of which have doubled or tripled in population in just the last few years — are seeing their infrastructure and emergency services budgets strained. And because North Dakota’s legislature only meets every other year, in the odd numbered year, those growing budget problems aren’t going to be solved any time soon.

Now, Democrats in North Dakota’s legislature are urging Gov. Jack Dalrymple (R) to call a special legislative session this year to deal with the booming growth in western North Dakota.

Those Democrats want to pass legislation that would reallocate part of the state’s tax on oil and gas production to give localities new revenue.

As it stands, North Dakota taxes production at 5 percent, and a quarter of that revenue goes to political subdivisions — the cities and counties where the production was located. Counties receive about 11 percent of the total tax revenue, while cities get the rest.

That’s far below neighboring states. Wyoming and Montana give about 40 percent of revenues from their production taxes back to political subdivisions. Democrats in North Dakota will propose remitting 60 percent of the production tax to cities and counties for the next two years, and 40 percent thereafter.

“Communities have reached their bonding limits. The counties, which are not able to borrow legally, they can’t do any long-range planning,” said state Rep. Kenton Onstad, the House Minority Leader. “There’s absolutely no reason to wait. We need to address it now.”

Onstad pointed to Watford City, a small town southeast of Williston, where the population expanded from 2,000 residents in 2006 to about 10,000 today. In his hometown of Parshall, Onstad said, he sees new faces every time he goes to the grocery store.

“If we wait until January [when the legislature meets next] and start addressing it then, the money probably wouldn’t get appropriated until July. So we’re already 12 to 18 months behind,” Onstad said.

As the drilling industry expands, North Dakota communities are having to build hundreds of miles of new roads. Corporations have picked up the tab in many cases, and paid for expanding ambulatory and fire fighting services. But the companies won’t pay the bill forever, putting the onus on cities and counties that are already feeling the strains of new population.

In a statement, Dalrymple’s office said he would take seriously the Democrats’ call for a special session.

Reallocating the money isn’t necessarily a partisan issue: The legislature has held a special session to deal with oil country needs before, most recently in November 2011, when the state issued grants to counties facing rapid growth.

Related: Nprth Dakota poised to top 1 million barrels of oil per day

Reid Wilson covers state politics and policy for the Washington Post's GovBeat blog. He's a former editor in chief of The Hotline, the premier tip sheet on campaigns and elections, and he's a complete political junkie.
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Reid Wilson | February 27