It appears, at least superficially, the very little time I took to glance at it, the North Dakota legislators are moving at a measured pace in making decisions. I prefer that to making hasty decisions that "we" might regret later.
Everything suggests that the Bakken will continue to do well for quite some time but unforeseen geopolitical events could change things in a hurry.
So, just to make sure everyone understands: I prefer a measured, well-thought-out plan and based on limited information I can support the action of North Dakota legislators.
I still have significant concerns at the federal level.
It's not easy finding the North Dakota biennial budget numbers. Oh, I suppose it is easy, but every time I go looking for it, it seems I have problems finding it. I wonder why?
Anyway, there was a story back in December/January 2009 that actually put all the necessary information into one sentence, the entire lead paragraph:
Paul Lucy, director of the Division of Economic Development and Finance, North Dakota Department of Commerce, says that after the last biennial budget of approximately $2.5 billion, North Dakota’s projected budget surplus was estimated at $1.2 to $1.3 billion. “That means we don’t need to increase revenues by increasing taxes,” he says.If I read that correctly, North Dakota's biennial budget is approximately $2.5 billion. Biennial means two. The state will budget approximately about $2.5 billion over two years.
Current projections are that the state will earn $1 billion / year from oil taxes going forward. Over two years, that would be $2 billion. ($1 billion/year x 2 years = $2 billion).
Right now the estimated budget surplus is $1.2 to $1.3 billion.
UPDATES:
October 22, 2010: North Dakota is in the best shape fiscally, as far as I know, and it isn't even in the top five tax-friendly states for retirees, according to Kiplinger. These are the top five tax-friendly states: Alaska, Wyoming, Michigan, Pennsylvania, and Colorado.
October 11, 2010: State Coffers Swell, Townships Broke -- Headline
why don't they cut the state income tax on individuals ? this run on the bakken will probably last 25-30 yrs. and lower taxes will encourage real growth where government spending will encourage people that want someone else to pay and do the work. I am not a tea party person , but have seen first hand what 130 yrs of welfare has done to the Indian reservations of s.d. the res .counties of sd are the poorest in the nation.
ReplyDeleteI agree 100 percent. But I'm not holding my breath on cuts in taxes. Before we see any cuts in taxes, I expect we will see a call for increased taxes on the oil companies extracting all that wealth. We saw that in the last boom. This time it may be shaped a bit differently. Perhaps a huge slush fund to be established in case of an oil spill as a compromise to EPA regulating fracture stimulation. This is more likely to happen if the slush fund is managed in a "lock-box" in Washington, DC.
ReplyDeleteThe second possibility is a huge slush fund, again financed by the wealth coming out of the ground, to pay for huge dirigibles to store carbon dioxide if global warning again results in the severe hurricane season we had this year. This slush fund would be managed in the same Washington, DC, lock-box.
So, I agree with you 100 percent but based on events in the last boom, I expect calls for increased taxes on the oil companies first. That $1 billion surplus? Shoot, with increased taxes alone on the oil, we could boost that surplus several fold.
This seems to remind me of a fairy tale about a goose and golden eggs. I hope we have elected officials that see the wisdom of encouraging oil companies. That encouragement will return investment for decades rather than trying to get more up front.
ReplyDeleteThank you for your support. I don't want to step on toes and turn this blog into an emotion-laden, whining site, but once in awhile I will add a bit of fun, tongue-in-cheek. When I stray from the topic (the Bakken), please don't be too offended.
ReplyDeleteAgain, thank you for your support.
Are any of the commentees North Dakota reaidents? There have been two legislative sessions since serious new oil revenues have been generated. In neither of these has there been consideration of of new taxes, oil or otherwise. In both sessions, oil revenue related actions involved tax cutting and establishment of fund accumulations for the inevitable day of decline. Tax cuts have involved reductions in corporate taxes, individual income taxes, and property taxes. The North Dakota tax structure involves a balance of these. None of us can speak with authority regarding future actions, but those that do often bring little more than political bias to the thought process.
ReplyDeleteHess342
I do not focus on taxes when looking at the Bakken so I may have missed the news on the tax cuts in North Dakota this past year.
ReplyDeleteApparently, if I understand your comment correctly, North Dakota has cut corporate taxes, individual income taxes, and property taxes in the last twelve (12) months. That's outstanding.
My bigger concern is Washington, DC.
With regard to tax cuts in North Dakota, this is a pretty good place to start:
ReplyDeletehttp://www.taxfoundation.org/blog/show/24724.html
1. Individual income tax cuts at all brackets. Representative cuts: married, with $57,000 income, cut from 3.92% to 3.44%; married, with $137,000 income, cut from 4.34% to 3.81%.
2. Corporate income tax cuts: the link does not show the pre-cut rate; only the post-cut rate. It says that corporate tax collections will decrease $10 million per year. I don't know if this figure is significant because I don't know previous history.
3. Property tax: statewide rate cap imposed. The site does not say more, so I can't compare.
It appears that North Dakota legislators are taking appropriately measured steps. For me, this is actually a very good news story. Thank you for sending your comments.
Biased sources are seldom a good place to start. I'd recommend credible sources within North Dakota.
ReplyDeleteTo summarize, the 2007 legislature passed $118.6 million in tax relief consisting of:
A 10 percent income tax credit against property taxes for homeowners, farmers, ranchers and commercial businesses.
Expanded Homestead Tax relief for seniors and people with disabilities.
Elimination of the marriage tax penalty for middle class couples.
2009 legislation included about $400 million in tax reductions consisting of:
Property Tax Relief: The bill includes $295 million in aid to schools targeted to property tax mill rate reductions of 75 mills, and caps most schools at 110 mills, a 15 to 18 percent reduction. An additional $295 million is reserved for property tax reductions in the 2011-2013 biennium.
Individual Income Tax Relief: The bill reduces individual rates from 2.1 percent to 1.84 percent in the lowest tax bracket and from 5.54 percent to 4.86 percent in the highest, an overall 12 percent reduction to taxpayers.
Corporate Income Tax Relief: The bill simplifies the tax code by eliminating two of the state's top corporate income tax brackets, reducing the number of brackets from five to three. The lowest rate is reduced from 2.6 percent to 2.1 percent, a 20 percent reduction to help smaller companies, and the top rate is reduced to 6.4 percent.
Tax Relief for Seniors and People with Disabilities: A separate bill, SB2402, expands eligibility and increases funding for the Homestead Tax Credit to $10 million for qualifying seniors who own their homes or rent.
Interim legislative committes working on the 2011 session are proposing about $342 million in property tax reductions and $100 million in income tax reductions.
It's helpful to view this in the context of the North Dakota budget total as cited by Bruce above.
Hess342
Again, I really appreciate this. Puts this in the correct perspective.
ReplyDeleteDo not worry. I won't turn this blog into an ongoing argument over taxes.
The tone of my blog is generally upbeat, and in that vein, I will try to post only positive news about North Dakota taxes on my blog.
However, at the federal level, a different story.
Not right now, but possibly, I will post a stand-alone post about the good tax news coming out of Bismarck. I have to be careful; it's probably more contentious than I want to get. Smile.
Thank you very much for taking time to put all the above together.