In a recent newspaper column, we said the "[t]he oil extraction tax cut, ramrodded through the 2015 Legislature" by the Republican majority "in a matter of days during the close of the session, now is costing the state an estimated $11 million per month." Since then, a Forum Communications blogger has alleged this was not a "true statement[,]" going so far as to call it "wildly inaccurate."
Except it's not inaccurate. It's a fact.
Had the Republican majority eliminated the troublesome "trigger" incentive-as every member of the North Dakota Senate voted to do on a bipartisan basis in 2013 and again in 2015-and simply left the 6.5 percent extraction tax rate alone, the state would indeed be collecting "an estimated $11 million" more "per month]" according to data from the nonpartisan Legislative Council.
The broadly-supported trigger fix and the highly-controversial oil extraction tax cut are two different things. In fact, the only plausible reason for the Republican majority to shoehorn the oil extraction tax cut into the same bill as the elimination of the trigger incentive was to mask the cost of the cut. By the majority's design, it made this topic artificially "complicated" and "byzantine," to use the blogger's words. Harder to understand. Easier to spin.
Still, it's not neuroscience. The trigger was a tax incentive put in place by the Legislature decades before the arrival of modern horizontal drilling. Over the years, it morphed into a budget buster. It was a problem. The 6.5 percent extraction tax, enacted by a vote of the people, was in place as North Dakota rose to become the second-leading oil producing state in the nation. It worked for North Dakota, and it plainly didn't hold back oil development.
The sensible approach would have been to fix the problem and keep what works, understanding that in an established oil field with a 99 percent success rate-like the Bakken-it is the price of oil that primarily drives drilling, not tax policy.
Instead, the Republican majority permanently cut the oil extraction tax base rate by a remarkable 23 percent, rejecting our proposed compromise to keep more modest incentives on the books to nudge production during times of lower prices.
If that massive, permanent cut to the oil extraction tax truly served North Dakota's best interests, it could have stood on its own and faced the same scrutiny as every single one of the other 853 bills introduced during the 2015 session. But it couldn't, so it didn't. It was hastily fused to the trigger fix and then shoved through the Legislature-from introduction to final passage-in just about a week.
We value the oil industry's investment in North Dakota and its tremendous contributions to our economy. We also value the truth. The 6.5 percent oil extraction tax helped North Dakota fund education, finance statewide water projects, cut property taxes, and save for future generations. The Republican majority's permanent cut to the oil extraction tax means significantly less to meet those priorities from now until the end of the life of the world-class Bakken oil play. And that's a "true statement." It was a "wildly poor" choice for North Dakota.
Sen. Schneider, D-Grand Forks, is N.D. Senate minority leader. Rep. Onstad, D-Parshall, is N.D. House minority leader.