1. HB1358 Oil & Gas Production Tax Distribution

2. BACKGROUND  17 Oil & Gas Producing Counties  85% of production from 4 counties  Mountrail  McKenzie  Williams  Dunn

3. Mountrail McKenzie Williams Dunn

4. 184 DRILLING RIGS MAY 11, 2013 ND Industrial Commission Website

5. TWO TAXES  Gross Production Tax (GPT) - 5%  Extraction Tax (ET) – 6.5% Total = 11.5%  HB1358 relates to GPT only

6. % OF GPT BACK TO LOCAL GOVERNMENT

7. % OF GPT & ET COMBINED BACK TO LOCAL GOVERNMENT

8. HUB CITIES & HUB CITY SCHOOLS  Population 12,500 or more  More than 1% of employment engaged in mining  Williston – 40%  Dickinson – 17%  Minot – 4%

9. HUB CITY ALLOCATIONS Williston 40 $375,000 $15 Million/year Dickinson 17 $375,000 $6.375 Million/year Minot 4 $375,000 $1.5 Million/year

10. HUB CITY SCHOOLS ALLOCATIONS Williston 40 $125,000 $5 Million/year Dickinson 17 $125,000 $2.125 Million/year Minot 4 $125,000 $500,000/year

11. FISCAL YEAR  Fiscal Year 2013 (FY2013) – ends June 30, 2013  Fiscal Year 2014 (FY2014) – begins July 1, 2013  July 2013 Production  Reported to state in August 2013  Paid to counties, cities, schools in September 2013

12. FISCAL YEAR  Current Formula applies to all payments you receive through August 2013  New formula applies to payment you receive in September 2013

13. CURRENT FORMULA  5 different tiers for split between state & county  First $2 Million – 0/100  Third $1 Million – 25/75  Fourth $1 Million – 50/50  Next $14 Million – 75/25  After $18 Million – 90/10

14. CURRENT FORMULA  Distribution to Local Government  45% General Fund  35% Schools (cap based on population)  20% Cities (no cap)  Infrastructure Fund

15. CURRENT FORMULA  Infrastructure Fund  Grants to Townships for Impacted Roads and to Schools for Buses  Infrastructure Fund goes away with new formula

16. NEW FORMULA (HB1358)  Only 2 different tiers for split between state & county  First $5 Million – 0/100  All $$ Over $5 Million - 75/25

17. NEW FORMULA (HB1358)  Two distribution formulas:  Counties less than $5 Million  Counties over $5 Million  State Treasurer will do ALL allocations to cities and schools

18. NEW FORMULA (HB1358)  6 Counties Less than $5 Million  Bottineau  Golden Valley  McHenry  Renville  Slope  Ward

19. NEW FORMULA (HB1358)  Counties Less than $5 Million  45% General Fund  35% Schools  20% Cities

20. NEW FORMULA (HB1358)  Billings  Bowman  Burke  Divide  Dunn  McKenzie  Mountrail  Stark  Williams 9 Counties Over $5 Million

21. NEW FORMULA (HB1358)  Counties Over $5 Million  60% General Fund  5% Schools  20% Cities  3% Townships (allocated by miles)  3% Townships (shared equally)  9% Hub Cities

22. NEW FORMULA (HB1358)  Counties Over $5 Million  9% to Hub Cities:  Williston – 60%  Dickinson – 30%  Minot – 10%  State Treasurer will do ALL allocations to cities and schools

24. AND MORE….  HB1358 - Sections 5, 6 & 7 – County Road Funds  $160 Million for counties over $5 Million in GPT allocations in FY2013  Allocated based on UGPTI study  July 2013 – June 2015

25. AND MORE….  HB1358 - Sections 5, 6 & 7 – County Road Funds  $120 Million for counties that did not receive $5 Million in GPT allocations in FY2013  Allocated based on the miles of road defined by NDDOT as county major collector roads in each county  July 2013 – June 2015

26. AND MORE….  HB1358 - Section 8  $2 Million Appropriation  Nursing Homes & Basic Care Facilities  Allocated by Dept. of Commerce in January 2014 and January 2015  Based on number of FTE’s – determined by NDDHS

27. AND MORE….  HB1358 - Section 10  $9.6 Million Appropriation  Critical Access Hospitals  Allocated by ND Dept. of Human Services  One time funding  Max of $4.8 Million each year of biennium

28. AND MORE….  HB1358 - Section 11  $9.6 Million Appropriation  Attorney General’s Office  Grants to Law Enforcement agencies in oil impacted counties  Up to 10% may be used by AG’s office to offset added expense  Max of $4.8 Million each year of biennium  Development of uniform law enforcement & custody manual

29. THANK YOU  NDAOGPC, Brady Pelton  NDACo, Mark, Terry & Aaron  Representative Bob Skarphol  Governor Dalrymple

30. Oil & Gas Producing Counties Auditors and Treasurers Training Session State Treasurer’s Office State Treasurer Kelly Schmidt June 12 – 1:00 p.m.