WILLISTON — Gov. Jack Dalrymple said plunging oil prices won’t bother North Dakota's budget forecast for the upcoming biennium, calling the state's $74 per barrel projection “conservative.”
In a conference call with the Williston Herald Editorial Board, Dalrymple said only 3.6 percent of the state's general fund comes from oil tax revenue, and an impact on sales and taxes won't be seen unless production drops.
“We don't run the state on oil revenue,” the governor said. “The Bakken is so productive that the four major oil producing counties have the lowest cost of production per barrel in North America, third lowest in the world. In a situation where people start shutting down drilling, we will be among the very last.”
A $6 one-day drop rattled analysts and the market, he said, but added a company recently added two rigs in McKenzie County.
“We worry about the trigger price,” Dalrymple added. “We're a long way from that. It's about $55 per barrel, so we don't have to worry about a weak market in North Dakota.”
Along with the new 60/40 proposed split of the oil and gas tax formula, Dalrymple offered up $873 million in “jump start” funding for oil and non-oil counties.
Williston is set to pick up $75 million from the fund, something the governor said was based off extensive talks with county and city leaders.
“I hope they feel it was a great day—$75 million in cash, no strings attached,” he said.
The one-time funding is aimed at infrastructure needs and sends direct money to Minot, Dickinson and Watford City. Senate Majority Leader Rich Wardner, R-Dickinson, said he would put forth a bill for $800 million in surge funding, but didn't include Watford City.
“I will confess, we felt Watford City was right up there in terms of impact and upcoming needs,” Dalrymple said. “We did put them in the same category as Dickinson in terms of infrastructure needs. Up until then, they weren't. That's $50 million in cash that Brent [Sanford] wasn't expecting.”
Rising debt levels will be an upcoming issue the state needs to address, Dalrymple said, as oil patch cities are nearing the larger North Dakota cities' level.
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