Legislative update: Senate District 4

Good afternoon!

Here is my legislative update for the week.

Thank you!

District 4

Jordan Kannianen

Greetings to you, my friends and neighbors.

A disagreement regarding the distribution of the oil extraction tax, which has been visited by various parties over the years, has resulted in a delayed bill being introduced to attempt to resolve the issue.

Current practice is for the extraction tax collected off of the reservation to be distributed into the common schools trust fund and the foundation aid stabilization fund (10% each) with the remainder deposited into the state general fund, while all of the extraction tax collected on the reservation is placed in the general fund after distributing the tribal share.

Some believe this is a misallocation and that the remainder after the tribal share should also be distributed through those school funds before the rest goes to the general fund.

Jodi Smith of the land board claims that $137 million has been misallocated this way, while attorney general guidance given in 2012 approves of the current method followed by the state treasurer.

The delayed bill will have a hearing in our Senate finance and tax committee next Wednesday. Language for both options will be drafted and we will see which direction we head after hearing all of the testimony.

The current method of allocation obviously means there is more money in the general fund, while the other method would mean less in the general fund and more to the school funds.

The earnings of the common schools trust fund are used to fund K-12 education, and the foundation aid stabilization fund is used to keep K-12 funding whole whenever budget cuts have to be made, like the allotments from nearly 3 years ago.

Some are advocating for the state to pay back those funds retroactively, but going down that road is very unlikely.

HB 1439 would provide for an exemption to the oil extraction tax on the incremental production increase on a well that uses carbon dioxide for enhanced oil recovery.

The use of carbon dioxide has been shown to dramatically increase the amount of recoverable barrels of oil in a well, but its very high costs makes it uneconomical without a tax break.

The potential to double the amount of oil recovered out of any given well would mean tremendous opportunities and growth for the both the oil and coal industries (who would supply the CO2).

The coal industry testified it could double the number of coal jobs in the state.

Have a great week and I will look forward to reporting again next week.

Jordan Kannianen, District 4 Senator

701.421.8813 (cell), jkannianen@nd.gov

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