HB1358

HB 1358Oil & Gas Production Tax DistributionOffice of State TreasurerTwo TaxesGross Production Tax (GPT) - 5%Extraction Tax (ET) 6.5%Total Tax = 11.5%

HB1358 relates to Gross Production only

Fiscal yearFiscal Year 2014 (FY2014) began July 1, 2013 ends June 30, 2014Oil Produced in July Taxes Collected in AugustRevenue Distributed in September to Counties/Cities/ Schools

HB 1358 formula applies to distributions you received beginning September 2013

Current Formula (hb1358)2 tiers for split between county & state

First $5 Million 0/100All $$ Over $5 Million - 75/25

current formula (hb1358)Two distribution formulas:Counties less than $5 Million Counties over $5 MillionState Treasurer does ALL allocations to cities and schools FY 2014 and laterCounties responsible for handling prior year adjustments in the proper manner

current formula (hb1358)8 Counties Less than $5 Million FY 2013Bottineau*Golden ValleyMcHenryRenvilleSlopeWardMercerMcLean* Bottineau County is on pace to receive over $5M in FY 2014 so will most likely move into the Greater than $5M portion of the formula for FY 2015current formula (hb1358)Counties Less than $5 Million

45% General Fund35% Schools20% Cities

current formula (hb1358)BillingsBowmanBurkeDivideDunn

McKenzieMountrailStarkWilliams

9 Counties Over $5 MillionFY 2013County list is subject to change in 2nd year of biennium (Bottineau County will most likely move into this group)Current formula (hb1358)Counties Over $5 Million60% General Fund5% Schools20% Cities3% Townships (allocated by miles)3% Townships (pooled & shared equally)9% Hub Cities (pooled & split)

current formula (hb1358)Counties Over $5 Million

9% to Hub Cities:Williston 60%Dickinson 30%Minot 10%

Projected Distributions for FY2014**Projections based on actual distributions through first five months of FY2014, then using the November production numbers for the remaining seven months.Projected Distributions for FY2014* - Hub cities*Projections based on actual distributions through first five months of FY2014, then using the November production numbers for the remaining seven months.Potential formula changesChanging the County/State Percentage for amounts over $5 million (Currently 25%/75% County/State)

Potential Changes:50/5060/40 County/StatePotential formula changesEffects of changing the allocation percentage:Counties that receive less than $5 million wouldnt see any changesCounties receiving over $5 million would see a potentially substantial increase in distributionsIt would take considerably longer to fill State Share buckets (ie. GF, PTRF, Disaster Relief, SIIF)As final bucket, the Strategic Investments & Improvements Fund (SIIF) would see a potentially significantly reduced total contributionProjected % increases if formula adjusted to 50/50Projected % increases if formula adjusted to 60/40Projected % increases - Hub cities*Projections based on actual distributions through first five months of FY2014, then using the November production numbers for the remaining seven months.Portion received from 1/5 GPT remains the same.

Portion received from 4/5 GPT (9%) increases:HUB CITY school DistrictsWould not see any increase in oil & gas distributions under this change.Currently receive:Williston - $5.375 Million/yearDickinson - $2.625 Million/yearMinot - $750,000/year

Distribution informationThe formula flow chart and distribution amounts for Oil/Gas producing Counties, Cities and Schools can be found on the State Treasurers website at www.nd.gov/ndtreas Various search options are available. Note: Oil/Gas was originally a quarterly distribution. Treasurer Schmidt changed this distribution to monthly in December 2007.

Questions ?CONTACT State Treasurer Kelly SchmidtDeputy Treasurer Jeb OehlkeAccounting Manager Ryan Skor 701-328-2643