Bill would divert oil tax dollars to help Hub Cities pay legacy infrastructure debt; mayors and industry urge approval

Senator Brad Beckettall, R‑District 1 (Williston) introduced Senate Bill 2323, which would appropriate $20 million annually to an Energy Impact Fund earmarked for the three designated Hub Cities — Williston, Minot and Dickinson — to reduce debt incurred to accommodate oil‑industry growth.

Beckettall told the committee that the Hub City formula adopted in 2013 shifted gross production tax (GPT) distributions and created buckets of funding that did not fully anticipate the long‑term debt and operating costs the three largest oil‑region cities would carry. "This bill seeks to provide a $20,000,000 annual appropriation to the Energy Impact Fund for distribution to Hub Cities, specifically to reduce the debt burdens that remain from infrastructure improvements necessary to accommodate the oil industry growth," Beckettall said.

The bill would make that $20 million available from the state share of oil and gas tax allocations by adjusting how strategic investment fund (SIF) and other buckets are allocated. Beckettall and legislative staff explained the proposal would reduce the SIF allocation by $80 million (from $400 million to $320 million) in order to hold Operation Prairie Dog harmless while providing the $40 million per biennium (equivalent to $20 million annually) to the Energy Impact Fund. Beckettall said the adjustment is intended to pay roughly 58% of oil‑related city debt over six biennia while preserving other state commitments elsewhere in the bucket flowchart.

Williston officials described large, city‑level projects taken on during the boom. Howard Koluga, identified in testimony as council president and referred to as mayor of Williston, said the city built a new airport (a project he described as roughly $300,000,000), constructed a mechanical wastewater treatment plant (about $120,000,000), and added fire and ambulance capacity; the city’s remaining debt related to those projects and oil impacts was described in testimony as significant. Sean Wanko, Williston city administrator, told the committee the city budgets about $28–30 million a year in gross production tax and that the city’s annual ongoing debt obligation is about $28 million.

Minot Mayor Tom Ross said Minot pursued a conservative debt strategy after the 2011 flood, relying on sales tax, special funds and property taxes; he said the city deferred maintenance and critical projects and that the bill’s funding would free revenue now allocated to debt service so Minot could address overdue maintenance.

Dickinson Mayor Scott Decker told the committee his city has held its property tax collections flat for seven years and faces rising operating costs, new ambulance service responsibilities and infrastructure needs. He said his city’s serviceable debt is about $6.5 million annually and that new or deferred projects are accumulating.

Industry and association witnesses supported the bill. Jeff Simon of the Western Dakota Energy Association cited annual oil production and observed that the $20 million ask is small relative to county‑level oil revenue flows. Ron Nuss of the North Dakota Petroleum Council described Williston’s transient workforce and the city’s outsized service demands during exploration and drilling activity; he urged support as a way to preserve the economic driver the industry represents for the state.

Committee members asked whether changing the city/county split in the GPT formula might be an alternative, and Beckettall said counties continue to report road and related needs that justify their current shares. Staff and the senator also discussed the latest revenue forecast and price assumptions: legislative staff noted lower price assumptions would reduce SIF fills irrespective of the bill because the measure includes a hold‑harmless adjustment of $80 million to prevent direct reductions to Operation Prairie Dog.

Several city witnesses described constrained local options. Williston’s finance director, Hercules Cummings, said the city has used sales tax, water‑rate increases and bond refinancing to manage shortfalls; Wanko said Williston transferred $9 million from GPT to offset public safety last year. Williston Mayor Koluga told the committee, "We will pay it back. We haven't defaulted on any debt, and, actually, our credit rating has gone up over the last few years." He described the strain of operating ambulance services and public safety capacity created during boom years.

Supporters asked the committee to recommend a due pass; the hearing record shows extensive testimony in favor but no committee vote on final passage of SB 2323 during the hearing. The committee closed the hearing and will consider the bill as it moves through the chamber.