Bonus holiday edition Ask Your Government

Dear Teri,

If North Dakota is the No. 2 producing oil state in the United States, then why don’t we do what Alaska does and give the citizen a percentage of the money from the oil that the state produces?

Todd Gonser

Dickinson

Thanks for writing! I hear this question often lately, so it’s a good time to do a refresher on this issue. I’ll give a short answer and then a longer one about why the state doesn’t do this.

The simple answer: The state Constitution doesn’t allow it. North Dakota has a complex system for how it distributes oil tax money that doesn’t leave a lot of “free” money left over. It would require state law and constitutional changes to change this system. Plus, Alaska has much more money.

Now, here’s the longer explanation, starting with Tax Commissioner Cory Fong’s response:

“Many have suggested that the state of North Dakota make direct payments back to North Dakota’s residents using the surplus oil/gas tax revenues, similar to the state of Alaska’s program. 

“In order for North Dakota to do something similar, our state Constitution would likely need to be changed. Currently, the North Dakota Constitution prohibits the state from ‘gifting’ state money unless it is given in support of the needy or some other public good.

“Even if the state Constitution allowed for direct payments back to our state residents, those payments would be spread among all qualifying recipients. Depending on the requirements of the program, the payment per person may not amount to that much.”

The reason Fong says this is because the state has a complex formula for how it distributes/spends oil tax money, which I explained in two columns several months ago.

Total oil tax collections for this biennium – through May – are $714.1 million in production tax and $787.7 million in extraction tax, or about $1.5 billion, according to the state Tax Department.

A chunk of the oil tax revenue benefits the oil and gas counties. From July 1, 2011, through this May, oil and gas producing counties (and cities/schools/townships) received a combined total of $93.7 million through the distribution formula, said Kathy Strombeck of the Tax Department.

There was also $100 million in oil tax money set aside to provide energy impact grants to the oil and gas counties, as well as $4 million for oil and gas research.

Several western North Dakota officials have told legislators they need to send more money back to the oil counties, so these numbers could go up in the future.

Other oil tax money goes into accounts that support property tax relief ($261.8 million worth so far and growing), K-12 education, infrastructure and flood projects across the state.

Plus, 30 percent of oil tax revenue is locked up in the Legacy Fund until 2017. The fund has rules for how money can be spent after that. As of June, there was nearly $397 million in the fund.

One could point to the oil tax revenue that goes into the general fund as money that could go back to North Dakota residents. Right now, there’s a cap of $300 million in oil revenue that can go into the general fund.

Legislators will more than likely use surplus general fund money for further tax relief and infrastructure needs during the next session.

But, for fun, let’s say the $300 million was slated to go back to North Dakota residents instead. If there are 684,000 North Dakota residents, that would come up to $438 per person.

But, keep in mind there would also need to be additional state employees hired to accept and review applications and to manage and distribute this money like there is in Alaska.

Alaska, which has a population of about 723,000, has a dividend division with 81 employees. The division’s operating budget for fiscal year 2013 is $8.4 million, said Jerry Burnett of the Alaska Department of Revenue. Since North Dakota makes budgets in two-year periods, that would be $16.8 million.

Alaska also has a Permanent Fund Corp., which manages the now $40.5 billion fund. The corporation has an operating budget of approximately $11 million for fiscal year 2013 with about 40 positions, Burnett said. They are authorized to spend a little more than $100 million in external custody and management fees in fiscal year 2013, he said.

The Alaska Permanent Fund Corp. is self-supporting. All expenses are paid out of the revenue generated by the fund’s investments, said spokeswoman Laura Achee.

The expenses of the Permanent Fund Dividend Division are also paid out of fund earnings (subtracted from the dividend lump sum before it is divided into individual dividend payments) and not from the general fund, she said.

So, once all of that is taken into account (plus paying for North Dakota office space for these employees), each North Dakota check would likely be worth less than $75. And the Legislature wouldn’t have that money for state projects.

Granted, the Legislature could look at raising the cap on how much oil tax revenue the general fund receives (as it has in the past), but that would mean taking money away from the infrastructure and the disaster relief funds.

North Dakota taxpayer advocate Dustin Gawrylow of Bismarck-Mandan doesn’t think there should be a direct payment of funds to residents.

“First off, those funds are not always going to be there,” he said. “What we should do with this oil revenue is look at our entire tax structure and rebalance it … while it is a populist idea to start cutting checks to everybody, the better thing would be to take that (money) and use it to prevent taxes from ever having to go up again in the state.”

One could point to the interest and earnings of the Legacy Fund as a potential for returning money to residents in the future. Now at almost $400 million, it’s in the beginning stages compared to Alaska’s $40.5 billion permanent fund.

Here’s more on Alaska’s system from my past and recent discussions with Burnett from the Alaska Department of Revenue:

“It is a common misperception outside of Alaska that the state is paying out a portion of its oil royalties, or even oil taxes, to residents … the dividends that are paid to residents come from the earnings on royalties that are invested in a range of assets including stocks, bonds and real estate.” 

In 1976, there was a constitutional amendment in Alaska that set up the permanent fund, which receives 25 to 50 percent of the rents and royalties from minerals – which are almost entirely oil.

The principal of the fund cannot be spent, but the earnings can be appropriated by the Legislature.

In the early 1980s, the Legislature set up a program where half of the average of the previous five years’ earnings on the permanent fund would be returned to state residents each year—a permanent fund dividend.

Dividend amounts have varied from hundreds of dollars to more than $2,000. Last year’s dividend was $1,174, Burnett said.

In years when there’s a need for additional money, there’s been pressure to use the fund for other things. “But people become very bought into the idea of getting money every year, so it does make it very difficult once you start doing this to use the money for anything else,” Burnett told me a few years ago.

Do you have a question for a North Dakota state government official or agency? Send us your question, and we’ll do our best to find an answer.

E-mail politics@wday.com (Subject: Ask your government).

You may also write to Teri Finneman c/o Forum Communications, Press Room, State Capitol, Bismarck, ND 58505.

Please include your name, town and a phone number to reach you for verification.

State still short two dozen bullying policies

BISMARCK –Two dozen school systems did not meet the July 1 deadline for turning in school bullying policies as ordered by state law.

The Department of Public Instruction received 205 policies before the deadline and received Dickinson Catholic Schools’ policy on Monday for a total of 206, said Val Fischer, director of safe and healthy schools.

Overall, 229 policies should have been in as of July 1. This is a slight decrease from the original 235 expected due to schools that dissolved and preschool programs that were removed from the list.

The Department of Public Instruction was required to collect each district’s policy but wasn’t given legislative authority beyond that, Fischer said.

“Subsequently, no further action will be taken with those districts who failed to submit,” she said.

Schools that haven’t submitted a policy yet are mostly private schools with small enrollments, she said.

Dickinson Trinity Superintendent Kelly Koppinger said the school system took longer to finalize its policy to ensure it was done right. Final approval occurred last week—before the state’s policy deadline—and the policy just needed to be sent to the state, he said.

Carrie Pierce, a spokeswoman for Fargo’s Oak Grove Lutheran Schools, said they also had an approved policy on its way to the state.

In March 2011, the Legislature approved a law requiring school districts to have bullying policies. Both public and private schools fall under the law.  

 

Today’s Ask Your Government

Dear Teri,

(Regarding) minerals I have inherited in Slope County, North Dakota: As I look on the Oil and Gas Commission’s map, it appears that drilling stops at the north of the county and begins again in the county to the south.

It makes me wonder why. Since I don’t have a clue who the other mineral owners are, could it be because no one can find them? If this is the situation, does North Dakota allow an oil company to “force pool” that acreage and place those monies in a suspense account until the owners are found?  I’m concerned because I have enough acreage for the drilling locations, sites or pads.

Respectfully,

Jack Gant

Mustang Island in Port Aransas on the Texas Gulf Coast

Thanks for writing! I contacted North Dakota Department of Mineral Resources spokeswoman Alison Ritter. Here’s what she said:

“There is a tiny part of the Bakken that reaches northeastern Slope County, and operators simply haven’t moved that far south yet. There is no Bakken formation present in (neighboring) Bowman County. Historically, any drilling done in Bowman County has targeted other formations. If mineral owners aren’t locatable, the royalties paid on a well are sent to the Unclaimed Property Division of the North Dakota Department of Trust Lands.”

 

Dear Teri,

I have a question that has come up often amongst friends while traveling together.

We have noticed that the yield signs are no longer posted on the on-ramps for interstate as they used to be and, fairly often, (I) have been flipped off by my fellow citizen for not adjusting for their inappropriate speeds, either way too slow or a speed above what is posted for the area. 

When I went to driving school many years ago, the person adjusted their speed coming onto the highway, to fit into the openings. Many of them are not up to speed yet, and they except me to slow down to let them onto the highway. Have there been some traffic rule changes that many of us missed?

Thanks for your time.

Donna Johnson

Fargo

Thanks for writing! I contacted Lt. Jody Skogen with the North Dakota Highway Patrol and Jamie Olson with the North Dakota Department of Transportation. Here’s what Skogen said:

“Drivers entering a roadway from an on ramp should do so in a manner that does not cause traffic already on that roadway to be forced to compensate for them. That being said, responsible motorists can anticipate the merge and make a lane change or slightly adjust their speed to help facilitate a smooth and safe lane entry.”

Here’s what Olson said:

“The reason there are no longer yield signs on the on-ramps to the interstate is that, over the years, the interstate ramps have been lengthened to comply with federal standards. Therefore, yield signs are no longer needed. The entrance ramps allow you to adjust your speed to merge safely with the flow of traffic on the highway. Only stop on the ramps if there is no opening in the traffic flow. Unless posted signs indicate otherwise, any vehicle entering the freeway from an entrance ramp must yield the right of way to vehicles on the main roadway.

“Thank you for contacting the North Dakota Department of Transportation.”

Do you have a question for a North Dakota state government official or agency? Send us your question, and we’ll do our best to find an answer.

E-mail politics@wday.com (Subject: Ask your government).

You may also write to Teri Finneman c/o Forum Communications, Press Room, State Capitol, Bismarck, ND 58505.

Please include your name, town and a phone number to reach you for verification.

Land Board approves $25M in energy impact grants

BISMARCK — State officials approved nearly $25 million worth of grants Thursday to help the state’s oil- and gas-producing counties.

The Board of University and School Lands awarded $4 million to address public safety and education-related projects that will benefit several counties.

The Southwest Multi-County Correction Center in Dickinson will receive $705,000 to update control room equipment to improve facility safety.  Operations Administrator Doris Songer said she was thrilled to get funding to update the equipment installed in 1981.

“With the changing demographic and the diverse population brought upon by the oil impact, our six owner counties have been seen an increase in the number of inmates housed here,” she said. “We’re very excited to get this (money) to bring us up to date in our control room.”

McKenzie County will receive $800,000 to help with a law enforcement center remodel and $1.2 million to help its landfill with the “overwhelming increase in municipal and solid waste.”

The board also provided $806,000 to assist with teacher housing in Alexander, Grenora, Watford City and Tioga. State Superintendent Wayne Sanstead said he was pleased to see help for the school districts.

The board also pledged $20.8 million to help 13 smaller oil cities with infrastructure needs.

Crosby will receive $4.1 million for water and wastewater infrastructure expansion. Other cities awarded water/sewer funding include Belfield ($100,000), Bowman ($40,000), Halliday ($188,000), Richardton ($50,000) and South Heart ($1 million).

South Heart Mayor Floyd Hurt called the funding “wonderful news.”

“It’s very important. It would help us a great deal because we’re needing the money to grow,” he said. “We need lagoon space, and we need another water tower. We’re going to need a lot more money than that to make the project go, but that would be a great, great help.”

In the past year, the Land Board has approved or pledged $114.4 million in impact grants to help the oil- and-gas producing counties. Another $5 million went to help schools dealing with rapid enrollment growth.

The Land Board has also set aside $500,000 for a grant round to help oil cities facing a child care shortage.

That leaves about $9.3 million in grant funding for the next fiscal year for townships, emergency services, other political subdivisions and any special needs that may arise.

State Treasurer Kelly Schmidt asked how many of the projects receiving funds have been completed and how much funding has gone out. The energy impact grant money isn’t officially awarded to a political subdivision until a project or phase is complete.

So far, $23.6 million in checks have gone out, said Lance Gaebe,director of the Energy Infrastructure and Impact Office. A lot of the pledged money is at work now as political subdivisions move forward with projects, he said.

Schmidt asked if any political subdivision has decided not to do a project after not receiving as large of an impact grant as hoped.

Political subdivisions are asked to confirm acceptance of an award, and no one has turned one down so far, said Gerry Fisher, assistant director of the Energy Infrastructure & Impact Office.

Gaebe said they hope to be able to track projects closer in the future.

Money for these grants comes from taxes paid to the state by the oil and gas industry. During the last session, the Legislature agreed the state could spend up to $100 million of this money during the 2011-13 biennium to help address needs in western North Dakota’s 17 oil- and gas-producing counties.

In November, the Legislature approved spending $30 million from the general fund for impact grants if oil and gas tax collections exceeded projections by at least $48 million, which they have.

A list of projects approved for state funding is at http://www.nd.gov/energyimpact/.

Wyoming asks North Dakota for help

BISMARCK — From the North Dakota Ag Department: Agriculture Commissioner Doug Goehring is notifying North Dakota landowners with available pasture and grazing land that Wyoming livestock producers are in need of land available for leasing.

“Wyoming farmers and ranchers have been dealing with severe to moderate drought in the eastern part of the state since early spring.” Goehring said in a statement. “The situation has reached a critical point, and many producers are looking elsewhere for grazing land for their animals.”

Goehring said Wyoming Department of Agriculture Director Jason Fearneyhough contacted him asking about the possibility of Wyoming cattle being moved to North Dakota.

“With the conditions the way they have been in Wyoming, we have a lot of producers looking for other options for their operations,” Fearneyhough said in a statement. “To help alleviate the issues that Wyoming producers are facing, we hope producers in surrounding states have some grass available for rent.”

Fearneyhough said producers interested in providing grass to rent for Wyoming producers can contact the Wyoming Department of Agriculture at (307) 777-7321.

Dr. Beth Carlson, North Dakota deputy state veterinarian, said all cattle imported from other states must meet North Dakota’s health requirements.

“Wyoming cattle producers who are considering moving their cattle to North Dakota should contact an accredited veterinarian to ensure the animals have had necessary tests and have health certificates,” Carlson said in a statement. “North Dakota landowners can be held responsible for animals on their property that have been imported without meeting requirements.”                

In addition to the usual import requirements, North Dakota requires that all sexually intact animals, 18 months of age, from eight Wyoming counties bordering Yellowstone National Park must be tested for brucellosis within 30 days prior to import, the news release said.

North Dakota’s livestock importation requirements are available here.

Today’s Ask Your Government

Dear Teri,

Who can use state-owned vehicles and what are the regulations?

Marlene Kouba

Regent

Thanks for writing! I contacted Jamie Olson at the North Dakota Department of Transportation. Here’s what she said:

“Regulations for state fleet vehicles are as follows: Only state of North Dakota employees are authorized to operate state, rented or leased/courtesy vehicles while conducting state business. Some volunteers, if acting in an official capacity on behalf of the state, and university students required to drive for educational programs may be considered temporary employees (and) are allowed to use state vehicles for those purposes.

“Some of the regulations include:

1. Operators must possess a valid driver’s license.

2. Operators must use state vehicles only for conducting state business.

3. Operators may not transport their spouses, children, animals or hitchhikers in state vehicles.

4. All occupants must wear properly fastened safety belts.

5. Smoking is prohibited in all state fleet vehicles.

6. Text messaging while driving or operating a state fleet vehicle is prohibited.

7. All complaints received from the public or otherwise by State Fleet Services for missutilization, driver behavior, speeding, etc., will be documented.

“Thank you for contacting the North Dakota Department of Transportation.”

Do you have a question for a North Dakota state government official or agency? Send us your question, and we’ll do our best to find an answer.

E-mail politics@wday.com (Subject: Ask your government).

You may also write to Teri Finneman c/o Forum Communications, Press Room, State Capitol, Bismarck, ND 58505.

Please include your name, town and a phone number to reach you for verification.

Looking for Vietnam era stories

As the nation commemorates the 50th anniversary of the Vietnam War, Forum Communications wants to hear from you.

Send us stories of your memories from that time period for a series that we are planning. We’re looking for stories from North Dakota/Minnesota veterans, their families and regular North Dakotans/Minnesotans who remember hearing about the war on the news, protests, etc.

Please include your name, your city and a phone number to reach you if we have any questions. We will publish as many responses as we can. Please limit your responses to 250 words.

You can send responses to politics@wday.com or write to Teri Finneman c/o Forum Communications, Press Room, State Capitol, Bismarck, ND 58505.

Latest oil stats

BISMARCK– The North Dakota Department of Mineral Resources has released a new batch of oil statistics:

March Oil 17,901,807 barrels = 577,478 barrels/day

April Oil 18,281,116 barrels = 609,371 barrels/day (preliminary) (NEW all-time high)

March Gas 19,302,603 MCF = 622,665 MCF/day

April Gas 19,521,986 MCF = 650,733 MCF/day (preliminary) (NEW all-time high)

March Producing Wells = 6,932

April Producing Wells = 7,025 (NEW all-time high)

March Permitting: 181 drilling and 1 seismic

April Permitting: 167 drilling and 2 seismic (all time high was 245 in Nov 2010)

March Sweet Crude Price = $76.29/barrel

April Sweet Crude Price = $78.17/barrel

Tuesday’s Sweet Crude Price = $73.25/barrel ND (all-time high was $136.29 July 3, 2008)

March rig count 205

April rig count 209

May rig count 211

Tuesday’s rig count is 212 (All-time high was 218 on May 29, 2012)

Legislators prepare for 2013 session

BISMARCK — North Dakota legislative leaders agreed Tuesday to move forward with a video project that they see as an opportunity to improve public access to the Legislature.

In previous sessions, the public has been able to go to legis.nd.gov to watch Senate and House floor sessions while they are happening.

Starting in 2013, video of floor sessions will also be recorded and placed online so the public can watch at their leisure. Cameras will also be placed in the two main committee rooms used by Senate and House Appropriations.

The public will be able to search and view a list of all recordings for a particular bill number, so they can skip ahead to watch the issue they’re interested in.

House Majority Leader Al Carlson of Fargo said the project will provide the public with greater access to what legislators are doing and increase transparency.

He said they can expand video coverage to additional committee rooms in the future.

Senate Minority Leader Ryan Taylor of Towner agreed they should improve public access.

“Some people can come to the session and sit and listen. A lot can’t,” he said. “This is one way to democratize the process to make sure everyone has access.”

The project will cost $110,500 in the 2011-13 biennium for the initial purchase and implementation of hardware, software and services.

Also Tuesday, legislative leaders discussed key dates for the upcoming 2013 session. The organizational session is set to begin Dec. 3. The plan is for the governor to present the executive budget and revenue proposals on Dec. 5.

The governor’s State of the State address is slated for Jan. 8, followed by the State of the Judiciary on Jan. 9 and the tribal-state message on Jan. 10.