Video: House Passes Oil Tax Trigger Reform


This morning the House Finance and Taxation Committee heard testimony on HB1476, which would eliminate the looming “big trigger” oil tax exemption and replace it with a flat and permanent 4.5 percent extraction tax. The committee kicked it out with a party-line 10-4 “do pass” recommendation, and the full House got a vote on it this evening.

It passed by a relatively wide margin, 57 yea to 32 nay, but not by a wide enough margin for the emergency clause to kick in. The emergency clause would have meant that the bill would go into effect the moment it is signed by Governor Jack Dalrymple. Without the emergency clause, the bill wouldn’t go into effect until July 1st. If the “big trigger” hits on June 1st as is expected that would mean the oil industry would get a month with no extraction tax due to the trigger before this bill kicks in and it moves up to 4.5 percent.

The debate was about what you would expect. Democrats were upset that the bill is being rushed through at the end of the session. They claimed that it would cost the state too much in revenues, and they claimed that the Three Affiliated Tribes (about 20 percent of the state’s oil production is on the Fort Berthold Indian Reservation) weren’t involved.

To that last point, House Majority Leader Al Carlson (R-Fargo) said he’s had at least five meetings with tribal leadership on this issue.

Republicans responded to Democrat complaints about lost revenues by pointing out that the “big trigger” hitting would be no picnick either.

“What happens if we do nothing and the trigger goes into effect?” asked Finance and Taxation Committee Chairman Craig Headland (R-Montpelier) “There will be no money in the SIIf fund. We will have to radically alter the education formula.”

“I don’t think it’s responsible for us to turn a blind eye to this and stick our heads in the sand,” he added. “This is a hard thing to pass. The industry doesn’t want it. The tribes don’t like it. I’m not going to stand here and tell you that a lot of lawmakers like it.”

But he said it should pass for the sake of “stability.”

Rep. Keith Kempenich (R-Bowman) was more direct in his assessment. At one point he rose and said the state was approaching the oil industry as a “get it all while you can” situation, but noted that the oil play is going to be here for a long time.

“If we really think this is a long term play we should start acting like it,” he said the second time he rose to address the floor of the House.