Senator Kendall Van Dyk (D-Billings) introduced legislation today putting a limit on the state’s 18-month oil and gas tax holiday and using the proceeds to address local impacts in communities facing the Bakken oil boom.
SB 399 is modeled after North Dakota’s highly successful tax-holiday system, which reduces oil and gas production taxes on new wells whenever oil prices dip below a certain level.
“Montanans have lived through oil booms and we have lived through oil busts,” said Van Dyk. “During each cycle of oil and gas production we pray for one more boom, and we promise not to blow it next time. Now we need to make responsible decisions that lessen the impacts on eastern Montana communities.”
The bill would create a trigger mechanism that offers oil companies low taxes when petroleum prices fall, but maintains taxes at their normal level when oil prices are high enough to stimulate development. Under the bill, that level would be priced at $50.07 per barrel or below for the “holiday” to take effect.
“We can no longer afford to shortchange impacts to communities, both social and structural, all of which are significantly stressed due to the oil boom,” said Brandon Schmidt, who sits on the Baker City Council. “This is how North Dakota does things, and no one can argue with a straight face that our neighbors to the East are hurting because of their policy. The companies profiting most should pay their fair share, rather than send the bill to local taxpayers.”
The bill is projected to return $20 million per year and the funding would go toward improving local roads and sewage systems.
SB 399 proposes the following:
Trigger Montana’s existing oil and gas tax “holiday” if oil drops is at $50.07 or below.
Fund the existing “Community Oil and Natural Gas Impact Relief Account” from oil and gas production taxes.
Distribute money from the “Community Oil and Natural Gas Impact Relief Account” for counties and towns to address priority impact needs.
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