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Other views: Democrats distort oil tax proposals in Legislature

Democrats are still spinning their tales with misstatements and half truths. A number of letters were printed across North Dakota last weekend on the oil incentive bill and they contained a lot of numbers but only half the story. Now the rest of ...

Democrats are still spinning their tales with misstatements and half truths. A number of letters were printed across North Dakota last weekend on the oil incentive bill and they contained a lot of numbers but only half the story. Now the rest of the facts.

HB 1530 is an incentive bill that was passed by the House and is designed to make our tax rates competitive with other oil producing states. It only applies to wells drilled after June 30 of this year and doesn't reduce the dollars that city, counties, or local school boards share in.

We are second highest among the top 10 oil producing states with our 11? percent tax rate with only Wyoming higher and they don't have an income tax.

Montana has an 18 month holiday for new wells that is less than one percent, regardless of the price of oil. This is important because of the limited number of rigs available and a limited number of workers so we are competing with other states for drilling. Oil companies get the same price no matter where they drill.

It was mentioned that 99 wells were drilled in the last six months since prices went up and that's correct, but it's also true that drilling dropped in half after the tax holiday went off and the tax increased to 11? percent on new wells.

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Companies are making money and to them they can do it here or in another state. When they go elsewhere, so do hundreds of top paying jobs as well as other service jobs.

HB 1530 actually has a positive impact to the state of $707,000 according to the fiscal note that was presented with the bill. If prices stay at $37 per barrel, we would actually receive some $30 million dollars more than projected, not $10 million less as stated in their editorial. If prices stay at $48 dollars, the state would receive even more money to our general fund.

And now let's go to Montana - one of our closest competitors. They have a 9 percent tax after 18 months but only .76 percent for the first 18. A Montana senator did introduce a bill to raise their rates but was defeated by his own party (Democrats) in committee thus leaving them effectively at .76 percent. I can assure you that whatever discussion we have in North Dakota has as much effect on them as their discussion has on us - none.

It was also implied that the only thing that drives drilling is price; if that's the case, why were they drilling when the price was at $12? There are three things that determine drilling and those are price, tax policy and availability.

Our oil fields are getting old and cost more to produce with a new horizontal well costing up to $3 million each. Just because someone makes money doesn't mean an open season on their pocketbook. Rich people not only pay the most in taxes, but they also provide the capital to provide jobs. The oil companies are in agreement with this bill and testified in favor of it.

Oil tax revenue has gone through the ceiling and all the Democrats want to do is increase the cost of government with new programs. What happens if and when oil prices drop? Back to the policy of the '80s when sizable tax increases were proposed to maintain those programs.

The Democrats are up to their old tricks of trying to make noise in the newspaper instead of making policy in Bismarck. Maybe that's why they're in the minority.

The House Finance and Tax committee also passed out tax incentive bills for biodiesel (SB2217) and ethanol (SB2270). The biodesiel bill was funded in part from the additional revenue that was forecasted from HB 1530.

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Drovdal, R-Arnegard, N.D., has served District 39 in the state House since 1993. He is vice chairman of the Finance & Taxation Committee.

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