CHICAGO -- North Dakota Gov. Jack Dalrymple may call lawmakers back to Bismarck for a special session devoted to financing infrastructure needs for local governments in the midst of state's record-setting oil boom.
Dalrymple, a Republican, is meeting local officials to decide whether to call for a session after Democratic state leaders last month formally asked for one.
Cities and counties in the western North Dakota, where the Bakken oil field is located, are lobbying hard for state relief to help them deal with exploding population and infrastructure demands. The state's Legislature is not set to meet again until 2015, as it typically meets every other year. The last session ended in May 2013.
"Right now many of our cities are bonded to the hilt, and they're not able to get projects done because they can't borrow any more money," said Brady Pelton, deputy executive director of the North Dakota Association of Oil and Gas Producing Counties. The association is set to meet with the governor on April 2.
The city of Williston, in the heart of the Bakken boom, was hit in January with its second downgrade in two years. Moody's Investors Service pushed the city's general obligation rating to Baa2 from A3, and assigned a negative outlook, due in part to significant infrastructure needs and pressured reserves.
Dalrymple is expected to make his decision in April. Some lawmakers have proposed legislation to increase the share of revenue that goes to local governments. North Dakota levies a 5% gross production tax on oil. Currently about 25% of the oil and gas tax revenue goes to local governments and 75% goes to the state.
Local governments are pushing for a 60% piece of the pie, with the state receiving 40%, Preston said.
"We know that kind of funding is necessary," he said. "The industry members are getting frustrated because they don't have places to put their employees and they're suffering large costs because of employee turnover. One thing we could do to make North Dakota a more business-friendly state is provide that infrastructure."
Oil taxes generated $5.3 billion for North Dakota in 2013-2015, up from $3.9 billion in the 2011-2013 biennium, according to Sheila Peterson, state director of fiscal management. Of that $5.3 billion, $585 million went back to cities and counties in the oil-producing region. Altogether, the state allocated $2.7 billion to western local governments, Peterson said.
Without new legislation, only short-term fixes are available, Dalrymple said. He's tapped two funds for a total of $40 million to finance various local projects in the last several weeks. The governor has also pledged to quickly introduce a new capital spending bill for western governments as soon as the 2015 session begins, Preston said.
The state in January also began a new program that provides loans through the Bank of North Dakota.
Standard & Poor's upgraded the state to AAA in December, the same month that oil regulators announced that production had reached an all-time high.