James Maxson, Minot
The next legislative period will be interesting to watch. Thanks to forces of nature beyond our control, North Dakota is blessed with abundant oil and gas reserves. As a result, a significant percentage of North Dakota’s tax revenue over the past decade has come from the energy industry. We are promised tax breaks for this. Who is against tax breaks? Isn’t that like being against puppies?
Tax breaks will no doubt be overwhelmingly popular. What could possibly go wrong? Well, for those of us who are old and gray, there’s the memory of the 1980s. The state of North Dakota lost double-digit revenue streams. What happened? A drought decimated the state’s agricultural income. Agricultural commodity prices plummeted. The price of oil tanked. Of course, that must never happen again.
The people of North Dakota later had the wisdom to form the Legacy Fund from oil and gas proceeds by direct vote. This trust fund is now approximately $8 billion. That sounds like a lot of money, but the interest this fund can generate, minus cannibalized inflation, won’t be enough to repair another 1980s scenario. Let’s bet history doesn’t repeat itself? Oil and gas are not infinite resources. How predictable is the weather in North Dakota? Soft commodity prices, like oil and gas prices, are like a dog’s tail. They are exposed to global events well beyond the control of Bismarck politicians. North Dakota’s future leaders may not have the luxury of being sugar daddies. Hopefully we’re not being fed empty calories.
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