Republicans in North Dakota will consider whether to slash income tax rates to zero, even as lower oil prices threaten to undermine the state’s otherwise healthy economic outlook.

State House Majority Leader Al Carlson (R) said this week he will introduce a measure when the legislature returns next month to cut both the personal and corporate tax rates completely. Another proposal from state Rep. Scott Louser (R) would cut only the personal income tax rate to zero.

Cutting individual rates completely would cost North Dakota about $1 billion over two years, Tax Commissioner Ryan Rauschenberger told the Fargo Forum. Corporate income taxes generate another $525 million every two years.

Seven other states, including neighboring South Dakota, do not have personal income taxes.

Gov. Jack Dalrymple (R) has proposed a more modest 10 percent cut to personal income taxes and a 4.8 percent reduction in corporate income taxes, which he estimates would reduce revenue by about $125 million. The top personal income tax rate in North Dakota stands at 3.22 percent, and the top corporate rate is 4.53 percent.

Both lawmakers say their plans would cut tax rates to zero without actually eliminating the income tax altogether. That would give lawmakers the ability to raise the income tax if North Dakota’s budget situation deteriorates.

And with oil prices falling, the prospects of drastic revenue reductions looms large in lawmakers’ minds.

Even in the midst of the recession, North Dakota’s budget situation was better than just about every other state’s in the country. The booming oil industry in the western part of the state bolstered state coffers to the tune of billions of dollars, courtesy of a 6.5 percent tax on oil extraction — more commonly called a severance tax.

The revenue generated from oil extraction made up a massive part of North Dakota’s budget when the price of oil stood at or above $100 per barrel. But with oil prices cratering — a barrel of light crude is trading at a little below $54 on Tuesday, down nearly 23 percent over the last month — the amount of revenue North Dakota can expect falls, too.

North Dakota lawmakers also placed a trigger on the price of oil, meaning tax rates will be cut if oil prices fall below the trigger point. The estimated trigger price for 2015 is $52.58 per barrel, according to data compiled by legislative staff.

If prices fall below that rate for five consecutive months, tax rates on oil production from vertical wells will be slashed to zero for 15 months, and rates on production from horizontal wells will fall to zero for 24 months. Several other extraction-related taxes fall dramatically, too. Oil prices have to rise above the trigger price for five consecutive months before normal rates are restored.

North Dakota took in about $9.2 billion in revenue during 2012, according to the latest data published by the U.S. Census Bureau. About a third of that money, $3 billion, came from severance taxes, compared with a combined $647 million from personal and corporate income taxes. Extraction taxes are already falling, given the price slump, and the threat of hitting the trigger price only further imperils the state budget.

Democrats will oppose the income tax cuts, and even some Republicans are nervous about slumping revenue.

“I don’t know if this is the time to pull the trigger” on lower income taxes, state Senate Majority Leader Rich Wardner (R) told the Fargo Forum.

North Dakota saved much of its oil-related windfall, but by statute the state can’t access its rainy day fund until at least 2017.