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Downside of North Dakota oil boom

Oil development is tearing up roads and bridges, ruining school buses, wrecking historic courthouse record books, ruining hay crops and causing labor shortages in oil producing counties -- while the state rakes in a huge surplus from the taxes the industry pays, officials from several counties told a Senate committee Tuesday.

The state has two ways it sends some of the oil production taxes back out to cities, counties and townships, but it is wholly inadequate, the officials said, testifying on Senate Bill 2051.

"We need help, guys, bad," said Mountrail County Commissioner Greg Boschee. "I don't think it's fair."

Mountrail County as been in the bull's eye of the Bakken formation boom in the past few years.

Senate Bill 2051 would abolish caps in state law that limit how much of the state's oil money flows back to the local governments.

Under the state's complicated oil tax revenue distribution, percentages of what is collected from oil and gas producers are funneled into different state trust funds, the state general fund and other mandated uses. Only a small percentage is sent back to the local areas where the oil originated, and once the local government reaches a cap mandated in state law, that's it for the fiscal year, even if the oil development has caused way more damage and expense than the funds cover.

Depending on size the counties get between $4.9 million and $5.6 million a year. Another state program, in which a few million dollars a year are awarded in oil impact grants to local government, also has a cap of $6 million.

"A million dollars doesn't go very far" in rebuilding a road pounded full of ruts and potholes by heavy trucks hauling drilling rigs, supplies, water, sand, pipe, oil and other materials, said Reinhard Hauck, Dunn County auditor.

"Come out and see the counties that have generated much of the state surplus," said Dunn County Commissioner Cliff Ferebee.

Boschee said the county had to make the decision to grind up an asphalt highway and return it to gravel because there wasn't enough money to repair or overlay the pavement.

Chris Larsen, the Dunn County recorder, whose office hosts the "landmen" who research mineral rights ownership records, said her copiers, computers, chairs and even historic bound legal record books are getting worn out or damaged by the workout they suffer with 25 landmen there per day. Books will cost $13,000 to repair, she said.

Mountrail and Dunn counties also have problems finding workers because the county can't compete with oil company wages.

"We can't find anyone to work for us," Hauck said. "We need another person in the sheriff's department and we can't find anybody."

Killdeer school superintendent said Dunn County roads are so bad from the oil traffic that a bus that should ordinarily last more than 200,000 miles is falling apart at 90,000 miles.

County officials' pleas were backed up by oil industry officials. Some oil companies are helping t he counties by assisting with snow removal and other expenses, but that does not solve all the problems.

"There's no reason why these counties have to be here begging," said Ron Ness, president of the North Dakota Petroleum Council.

The committee took no immediate action.