Prairie Dog Law Set To Bolster Bakken Infrastructure
April 17, 2019 | View PDF
A new law has passed the North Dakota legislature that is designed to fund infrastructure projects throughout the state and maintain current funding guidelines that assist the needs in McKenzie County.
North Dakota Governor Doug Burgum, signed the legislation that will help oil-producing regions in the state, from whence comes a great deal of state revenue. House Bill 1066 was called, “Operation Prairie Dog,” and intends to use revenue from oil and gas production to give more than $250 million to various products statewide.
The Prairie Dog Law is presumed to be a great help for McKenzie and Williams Counties in particular, because it will maintain their Gross Production Tax and keeps 30 percent of oil and gas revenue in Bakken counties coming back to the area to help maintain infrastructure.
Projects designated by the new funding bill include city, county, and township improvements, along with airport infrastructure. Most of this money will not be available until 2021 however.
The split of revenue mandated by the bill includes up to $250 million total, which is dependent upon oil tax revenue, with $115 million designated to North Dakota cities, $115 million designated to counties and townships, and $20 million designated to airport infrastructure.
Best said, “None of that money will go to McKenzie County. That will go to non-oil producing counties. The oil producing counties and their cities and the hub cities of Minot, Dickinson, and Williston are in a different part of that formula. But McKenzie County will continue to receive their 30 percent, which is what they receive now.”
Best asserted that even though McKenzie County won’t benefit directly from the infrastructure money, the law was still a major win for the area. When asked why local residents should be excited in spite of not having infrastructure projects earmarked in the bill, she explained that it provides a few other benefits the region needed.
Best explained, “This is good bill because maintaining the current percentage is a win. There are individuals in the legislative body who think the percentage should be reduced. So between the last session and now, the West Dakota Energy Association commissioned an interim legislative study to evaluate the needs of impacted communities and so that study showed there were still expensive infrastructure needs in the studies. Prairie Dog continued that 30% redistribution to continue to help with those infrastructure needs.”
She continued, “It’s not too terribly long ago that counties were receiving only ten percent, like back in the early 2000s.”
Best was very optimistic regarding the law and said there wasn’t much negative to complain about. Furthermore, the greatest advantage of the law was abrogation of a sunset clause on the revenue formulation that would allow McKenzie County to be more stable in their long-term planning.
Best said, “There aren’t really downsides. Another part of ‘Prairie Dog’ for oil and gas impact communities is the removal of the sunset clause. Historically, whatever bill the gross distribution tax was in had a sunset clause. Every biennium it might change and there was no predictability in what it would be going forward.
To clarify, Best explained that the 30 percent designation of revenue return isn’t precisely accurate, as the state takes a portion off the top for their own budget.
Best added, “Last year in 2018, McKenzie County received 78 million in gross production tax return, but it produces 40 percent of the oil revenue. Twenty percent is taken off the top for state budget needs, and that 78 million represents then thirty percent of eighty percent of McKenzie County oil revenue.”
When asked if removing the sunset clause on that formula would better allow the county to plan for the future with certainty, Best responded, “Yes, absolutely.”