Why Can’t North Dakota Democrats Stop Lying About Oil Tax Revenues?

State Rep. Pamela Anderson (D-Fargo) looks on as state Senator Merrill Piepkorn speaks at a press event. Via Facebook

During the 2015 legislative session state lawmakers made two changes to North Dakota’s oil tax code.

First, the eliminated an enormous extraction tax exemption which kicked in when oil prices were low, almost cutting the combined oil extraction and production tax in half.

Second, the lowered the extraction tax from 6.5 percent to 5 percent.

The net impact of these two changes, under actual market conditions since the policy was implemented, is that the oil industry has paid (through November of last year) $1 billion more in additional taxes than they would have under the previous tax regime.

Below is data proving this, provided to me last month by Tax Commissioner Ryan Rauschenberger (click for a larger view, full spreadsheet below):

The reason why the oil industry has paid more in taxes, despite the lower top rate, is because from January of 2016 when this policy change was implemented through April of last year oil prices would have triggered that tax exemption. Because the exemption was gone, the oil industry has paid more.

“Because we had five months above the trigger price in late 2017 and early 2018 the oil tax rate would have been raised back to 11.5% from March 2018 production going forward,” Rauschenberger told me last month. “However, if the current low oil prices continue one has to assume the triggered incentives (lower rates) would kick back in.”

Still, because of this policy change, the state has netted more than $1 billion in additional tax revenues even despite the oil industry paying a lower rate for the last several months.

Yet Democrats, in a press event today announcing legislation to restore the oil tax rate, continue to lie and say this policy change has cost the state revenues. Here’s the video of their announcement:

“This bill was shortsighted and has cost the state $570 million over the last four years. That is money that could have gone to roads, to schools, to the essential services of government that our citizens need and deserve,” state Senator Merrill Piepkorn is quoted as saying in a press release.

That’s a lie.

I realize that Democrats wanted to eliminate the trigger exemption and keep the oil industry paying the higher rate. And, yes, that would have produced more revenue for the state since 2016 when this legislation became law. But to say that this policy change has cost the state money simply isn’t factual.

I’m not talking about ideology or philosophy here. I’m talking about math. It simply doesn’t add up to what the Democrats are saying.

If they want to argue that the state could have more money if we’d raised taxes on the oil industry even further than we did, then fine. That’s a defensible position to take, even if you or I might not agree with it.

Saying the 2015 legislation cost the state money is a falsehood.

Rob Port is the editor of SayAnythingBlog.com, a columnist for the Forum News Service, and host of the Plain Talk Podcast which you can subscribe to by clicking here.

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