ND Legislature: Oil taxes tops Capitol

Published on NewsOK Modified: April 7, 2013 at 10:01 am •  Published: April 7, 2013
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BISMARCK, N.D. (AP) — In the waning weeks of the North Dakota Legislature, conference committees are hard at work reconciling differing versions of bills that have been endorsed in the other chamber.

The bulk of the Legislature's time will be taken up over the next few weeks by such meetings. Once agreements are met, the legislation is kicked back to the full Senate and House for approval.

The North Dakota Constitution limits the Legislature to 80 days of meetings every two years. The 2013 session will hit its 62nd day on Monday.

Still ahead are big topics, including oil taxes, a tribal agreement and an unsigned abortion bill:

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OIL TAX TRUST FUND

North Dakota's oil tax "Legacy Fund" could hit $1 billion this month and a state board now is recommending that half of the fund's assets be shifted to the stock market and other investments.

North Dakota voters approved the fund in 2010 and it's been rising faster than predicted with booming oil production. None of the money can be spent until 2017, and even then it takes a two-thirds vote of the Legislature to get into it.

March deposits were about $87 million, bringing the fund's total to $927 million, according to Darren Schulz, the interim chief investment officer of North Dakota's Retirement and Investment Office.

Oil revenue began gushing into the fund only since September 2011 and analysts initially estimated it would have a $618 million balance when the state's current two-year budget period ends on June 30.

Revenue from the fund has been invested mostly in short-term, low-risk and low-return U.S bonds, guaranteed by government agencies, Schulz said. But annual earnings from the fund, about 1.6 percent last year, is barely keeping pace with inflation, he said.

The seven-member Legacy Fund advisory board, created by the Legislature, now wants to build on the fund with a broader investment policy by placing 50 percent of the money in stocks and other types of investments.

The new strategy is estimated to bring an annual return of 6.35 percent, but will still be in line with the state's conservative investment policy, North Dakota Treasurer Kelly Schmidt said.

"This allocation will give the fund an opportunity to preserve principle for future generations and maintain purchasing power," she said.

North Dakota's Investment Board, which supervises the Retirement and Investment Office and oversees state and local government employee pension funds, is expected to adopt the Legacy Fund advisory board's recommendation later this month.

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OIL TAXES AND TRIBAL AGREEMENT

A North Dakota Senate committee has reworked a House bill aimed at restructuring oil taxes.

The edited measure by the Senate Finance and Taxation Committee would close the so-called stripper well loophole that's costing the state millions of dollars in lost revenue annually. And it would give the Three Affiliated Tribes a greater share of the taxes collected from reservation oil production.

The Senate approved amendments to the bill Friday and it now heads to the chamber's Appropriation Committee. It ultimately will go back to the House for consideration.

The measure does not offer overall tax cuts for drillers as in past proposals in exchange for closing the stripper well loophole, said Sen. Dwight Cook, R-Mandan, who chairs the committee.



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