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North Dakota Lawmakers to Decide Oil, Gas Tax Redistribution

The North Dakota House will review Senate changes to a bill that would create a new formula for distributing some oil and natural gas production and extraction tax revenues after the state Senate unanimously passed its version on Monday.

The state Senate vote 47-0 to enact HB 1176 to change the formula, so it is now up to the House to concur or send the bill to a joint conference committee for resolution. Both measures fall short of the increased share being sought by local governments.

"Very rarely are there two bills that are identical," said a spokesperson with the North Dakota Petroleum Council. "If the House doesn't concur with the amendments, it will go into a conference committee to work out the differences, and each body will vote on the measure again." As of Tuesday, the House had not decided which path to take.

The Senate's version has the same 70-30% revenue split between state and local governments that the House bill has, but it also has pending amendments that would change how some of the funding is allocated, an analyst in the state legislative council's office told NGI's Shale Daily on Tuesday.

Among the amendments added by the Senate are provisions to eliminate future transfer of excess oil/gas tax revenues placed in the state's Legacy Fund, expansion of the so-called "Hub City" definition for granting extra revenues to localities most impacted by oil/gas development, and specifying more  broadly the recipients of future local oil/gas impact grants from the state coffers.

In late February, the legislature began considering revisions to the longstanding formula used to distribute oil/gas tax revenues between state and local governments (see Shale Daily, March 2). The current legislative session ends April 30.

The House had passed its version by a vote of 70-18 and sent the proposal to the Senate on Feb. 26, providing less for local revenue needs than Gov. Jack Dalrymple and local leaders had sought.

In both House and Senate bills the changes are aimed at the state's current two principal oil taxes: a 5% tax on production and 6.5% on extraction. Both are assessed against oil's value when it is pumped. Currently, 80% of the annual production tax revenue above $5 million is divided between the state and local governments in a 75-25 split with the state getting the larger percentage.

Dalrymple and others earlier this year pushed for a 60-40 split, with local governments getting 60%.

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