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Planning for North Dakota's future . . .

The Legislative interim committees are nearing completion of studying issues brought forward and continued from the last Legislative session.

9/26/12 (Wed)

Legislative Committees
completing interim studies

By Rep. Glen Froseth

The Legislative interim committees are nearing completion of studying issues brought forward and continued from the last Legislative session.

The committees study issues affecting all aspects of state government, and make recommendations forwarding proposed bill drafts to the next session, which begins in January of 2013.

I served on three committees, dealing with Property Tax Reform, Finance and Tax, and Government Services. The Government Services committee was assigned to review state budget information and costs to continue major general fund expenditures in the 2013-15 biennium.

Initiatives forwarded to the next session include the continuation of the 75 mill school levy buy-down program. However, the program costs have risen from $342 million to approximately $400 million in 2013-15, due to increased valuations of property across the state.

Another proposal would offer a Homestead Credit to all homeowners on their primary residence. This bill draft will offer a homestead credit of $75,000 of valuation for homeowners under the age of 65 and a $125,000 valuation credit for those over the age of 65. The state will pick up this portion of the property tax credit, totalling approximately $350 million, which is above the $400 million mill levy buydown.

Both proposals are now forwarded to the full Legislature for their review in 2013.

Although the state general fund will have approximately $1.6 billion in surplus carryover on June 30, 2013, the projected “cost-to-continue” the present major general fund expenses is projected at nearly $200 million in state funds, due to legislative action or federal re-imbursement changes for the 2013-15 biennium.

The office of Management and Budget revealed tax collections are running about 15% higher than the budget forecast made in the spring of 2011. The largest contributors to the surplus are sales and use tax collections and oil and gas tax revenues. Due to the excellent economic condition of the state, both the individual income tax and corporate tax collections are considerably more than the budget forecast predicted.

Economic Activity
As everyone knows, western North Dakota has seen tremendous growth over the past few years, especially in the oil and gas development. The N.D. Industrial Commission used a Bentek Study to conduct a study to forecast oil and gas production growth through 2025.

The study revealed that gross gas production will increase nearly six-fold from 536 MMcf/d in 2011 to 3.1 Bcf/d in 2025. The study revealed oil production could reach 2 MMb/d in 2025. They predict the number of wells drilled will be maintained at approximately 2,400 per year through 2021, but with a declining number of rigs due to efficiency in drilling technology.

The report also shows an average of 19 days per well for a single rig to drill four wells on a pad, compared to an average of 30 days to drill a single well from a pad.

Value-added opportunities are in the future also, such as the proposed $1.2 billion fertilizer plant planned near Spiritwood, which would be the largest project in the state in recent history.

The report also stated barriers to continued growth are infrastructure and workforce. Even with the $1.2 billion dedicated to infrastructure, there is a long ways to go until we catch up with the damage being caused by energy development.

A recent report by the Upper Great Plains Transportation Institute at NDSU revealed North Dakota would need to spend $7 billion over the next two decades to rebuild and maintain county and township roads. The study recommended spending $834 million in the next two years alone, with about two-thirds of that in western North Dakota.

Other barriers that may affect the further development of energy resources include the price and demand of oil and gas, and federal regulations, such as the possibility of stopping the fracking of oil wells, and air quality standards that especially affect our lignite industry.

Water issues-
too much, too little
Too much water, too little water, water in the wrong places, and a host of other problems continue to be a concern for North Dakota.

Todd Sando, the State Water Commission engineer, gave a report of activity from that department, noting the new outlet at Devils Lake is working well and combined with the previous outlet, has reduced the level of Devils Lake by more than two feet and uncovered more than 30,000 acres of farm land. With both outlets working and normal moisture conditions, Mr. Sando said it would be possible to lower the lake from a high of 54.4 feet to a level of about 45-46 feet.

The new outlet was recently completed and put in operation. It is a 96-inch 5-mile long pipeline at the east Devils Lake outlet, and together with the previous outlet, can remove 600cfs from Devils Lake. The cost of the new pipeline project was approximately $80 million.

A map of water projects across the state shows the complexity of water systems and flood control efforts now under construction or in the planning stages. The Western Area Pipeline will carry water from the Missouri River southwest of Williston to the entire northwest corner of the state. The Southwest Pipeline is almost completed, with a few smaller extensions taking place.

The Northwest Area Water System is being extended to communities in north central N.D. and needs to be connected to Lake Sakakawea soon to enable the supply of water to serve its customers. The pipeline from Minot to Lake Sakakawea (about 45 miles) was completed a couple years ago, but a lawsuit with Canada has kept the pipeline from being used to carry water from the lake. Hopefully, that lawsuit will be resolved soon.

Then, to alleviate flooding along the Mouse and Red rivers, plans are in progress for huge diking or diversion projects to control flooding in Minot and along the Mouse River and Fargo and eastern cities along the Red River.

Yes, North Dakota has a nice surplus, and if the state manages it well in the next two decades, the state can have a strong infrastructure that will serve the citizens of North Dakota for generations to come. We are in a very enviable position among almost all the other states in the nation, and with careful planning our roads, bridges, schools and all aspects of our state’s infrastructure can be the best in the nation.