Beverly Hillbillies episode, when Jed Clampett's rifle shot missed low and produced a gusher? Well, it seems Jed's aim has moved a smidgen or two north now. There is gold in them there hills, black gold that is, North Dakota tea. The western badlands and plains in North Dakota are checker boarded with drilling rigs and pipes. They extract and transport from the Bakken oil fields and the underlying Three Forks formation, now confirmed by the USGS to include 7.4 billion barrels of oil reserve, an estimate that will only increase in years to come. On top of that, the fields contain 6.7 trillion feet of natural gas.
While some other states are raising tax rates to counteract stagnant or slowly growing revenue streams, North Dakota's tax revenues have risen by leaps and bounds, enabling tax rate reductions. Here is a 2013 report that highlights the favorable trends.
BISMARCK, N.D. — North Dakota’s last revenue report for 2013 from the Office of Management and Budget shows yet another month of double-digit percentage increases even after years of oil boom-driven revenue growth.
Six months into the 2013-2015 biennium, tax collections are running more than 20 percent above the previous biennium. Going back four bienniums to December of 2007, North Dakota’s tax revenues have increased nearly 135 percent.
In terms of raw dollars, the largest increase has been in sales tax revenue, which increased $142.68 million to $638.44 million for the biennium to date. By comparison, sales tax revenue at this point in December 2007 were $279.33 million.
As a percentage, the largest increase has been collections from personal and corporate income taxes, which have increased 43.7 and 65.6 percent, respectively.
That comes despite a 19.3 percent cut for personal income taxes and a 12 percent cut for corporate income taxes passed by the Legislature last year, the third consecutive session in which both tax rates were trimmed.Compare, for example, the state of Illinois, which raised its income tax rate by 67 percent and imposed a punitive corporate tax rate that is driving business out of the state. Also, contrast with California which has voted in double digit income tax rates on top of an incredibly high 7.5 percent sales tax. It is no wonder that North Dakota is now experiencing the most rapid population growth of any state in the country.
The state of North Dakota is profiting greatly from the rapid growth in the development oil and gas resources. But North Dakotans are not spendthrift short term thinkers or planners. They are putting a hefty portion of the oil wealth away in sovereign funds, a real investment for future generations.
Here is the scorecard,
The state Legacy Fund, a lock box for a portion of the state’s oil-tax wealth that was created in 2010, is now worth about $2.2 billion. The state Department of Trust Lands, which leases out North Dakota’s oil-bearing property, has about $4.6 billion – an increase of about 350 percent from fiscal year 2009, when the boom was just beginning.
The two-fund total of $6.8 billion may not sounds like all that much to those in the more populous environs on the coasts and through America's heartlands. But consider that North Dakota state population is 723,393. low enough to even allow some Montanans to sneer. Annual North Dakota state government expenditures are on the order of $4.5 billion. The Legacy and Trust Lands fund are growing on the order of half a billion dollars annually. If the combined fund reserve and surplus ratios were applied to the federal government as a whole, we would have approximately $5 trillion in investments (as opposed to the actual $18 trillion in debt), and our annual surpluses be around half a trillion dollars compared to the last six year average of just less than a trillion dollars ($954 billion).
N.D. Legacy Committee issues Measure One statement
BISMARCK, ND – In yesterday’s statewide election voters passed Measure 1, which establishes the North Dakota Legacy Fund.
“This is a bright day for the future financial stability of North Dakota,” said North Dakota Farm Bureau Public Policy Director Sandy Clark. “North Dakota voters made the decision to leave a legacy for future generations. Projections for the 2011-2013 biennium will put $613 million into the savings account and still have almost $700 million for immediate needs.”
The 2010 Legacy Fund measure requires 30 percent of the total collections of both the oil extraction tax and gross production tax are deposited into the fund. Deposits into and earnings of the Legacy Fund cannot be withdrawn until 2017. After 2017, the earnings from the Legacy Fund are transferred into the general fund, and the Legislature may spend up to 15 percent of the fund’s principle balance every two years with a two-thirds approval by both the House and Senate.
Dakota Draper, President of the North Dakota Education Association, said, “The NDEA is very pleased that North Dakota voters have supported a plan to make sure that the oil resources we have continue to provide for generations of future North Dakotans long after the oil is depleted. The balance of saving and spending in Measure 1 enables us to take care of present and future needs of all North Dakotans.”
The 2010 Legacy Fund is a more balanced approach than the similar measure proposed in 2008, which was based on specific dollar amounts rather than on set percentages.
Responsible fiscal management is spelled N_O_R_T_H D_A_K_O_T_A, not anything that correlates with or emanates from our federal government.
Have a blessed day and good luck to all.