The House has rejected a bill that would have lowered the oil extraction tax rate on new wells by one-half of one percent.
The extranction tax is now 6.5 percent. The bill would have lowered that to 6 percent.
It was part of a measure that would have tightened the tax breaks given to so-called “stripper wells” – those wells that fall below a certain daily production threshold. That law was designed to keep conventional wells pumping – but wasn't changed for Bakken wells.
Rep. Scot Kelsh (D-Fargo) says the state can’t afford to lose any oil tax revenue at this point.
"The extraction tax has stood the test of time," said Kelsh. "It was the rate when the Bakken boom began, and the industry is flourishing."
The author of the proposal -- Rep. David Drovdal (R-Watford City) -- says because state law had to be changed, removing the stripper well exemption is a tax increase. And he wanted this bill to be revenue neutral.
"When we started down here, we had $1.6 billion more than expected," said Drovdal. "No one came here expecting a tax increase on anybody, especially the industry driving the big surplus that we have. It's a balancing act."
The bill failed 71 to 21.
