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ND Democrats say cutting oil extraction tax could cost state $6 billion

BISMARCK - Democratic leaders said Tuesday a bill to reform North Dakota oil taxes could cost the state more than $6 billion over the next decade. Using projected oil prices and oil production from sources including the Department of Mineral Reso...

Mac Schneider.JPG

BISMARCK – Democratic leaders said Tuesday a bill to reform North Dakota oil taxes could cost the state more than $6 billion over the next decade.

Using projected oil prices and oil production from sources including the Department of Mineral Resources and the U.S. Energy Information Administration, Democrats calculated a “best-guess scenario” of the long-term impact of lowering the oil extraction tax.

Under their projections, approving House Bill 1476 would result in a loss of more than $369 million in the 2015-17 biennium. The assumptions also say the state would lose another $5.8 billion in oil tax revenue through 2025.

“This is best evidence of what is predicted to happen,” said Senate Minority Leader Mac Schneider, D-Grand Forks. “This is not us gaming a nightmare scenario. This is a nightmare scenario that is predicted to happen based on these projections.”

A Senate committee will take testimony on the bill at 2 p.m. today, after the House passed the bill Monday. The bill would eliminate the price-based “large trigger” tax break and lower the oil extraction tax from 6.5 percent to 4.5 percent.

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The fiscal note prepared for the bill estimates the state will lose an estimated $120 million in the next biennium if the so-called large trigger takes effect, which is expected to occur in June. The bill’s fiscal note does not address the long-term impacts of the bill.

Tax Commissioner Ryan Rauschenberger said Tuesday his department doesn’t typically forecast oil prices beyond the biennium because it’s so speculative.

Supporters of the bill cautioned Monday about the impacts to state budgets if oil prices stay low and the trigger stays effective for a long period of time.

Schneider said instead of lowering the tax rate, legislators should instead work to reform the triggers. Democrats plan to introduce amendments on the triggers today, he said.

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