Bakken Provides Opportunities and Challenges

With oil production on a steady upswing, opportunities to grow North Dakota’s economy, attract new businesses and expand existing businesses are abundant. However, with these new opportunities come challenges. It is now more important than ever for state and local officials to work together to capitalize on this growth, meet these new challenges, and create a business climate that fosters additional growth.

The state has garnered national attention because of its booming oil industry, nearly 3 percent unemployment rate, and strong economy. As these business opportunities tied to the Bakken continue to grow across the state, so does the need for additional investments in infrastructure, education and water projects.

Among the challenges is an influx of residents in the region’s communities and an increased demand for additional housing and community infrastructure. Increased activity on roadways has amplified the need for additional improvements and construction on area streets and highways. Reports note an increase in population has led to a slight increase in crime and the need for additional law enforcement officers. School space and childcare availability is also an issue for many communities.

State and local leaders, as well as the North Dakota Chamber, have already taken action to ensure these challenges are being met and solutions are being developed to create an even brighter future for the Bakken region and the state as a whole.

The North Dakota Chamber supported legislation that provided $371 million to repair state and local roads in Western North Dakota and an additional $73.6 million to counties and townships for road reconstruction. We also successfully lobbied for grants to address childcare needs and $625,000 in grants was recently awarded to help five Western North Dakota communities address childcare shortages.

North Dakota residents and businesses are also benefiting from more than $1 billion in cuts to personal, corporate and property taxes, the most in the state’s history, as a result of the cooperation of our legislators and business leaders. Because of our lobbying efforts, every North Dakotan will pay nearly 20 percent less in state taxes in 2012 while, at the same time, the state enjoys budget surpluses and healthy infrastructure investments. In the upcoming 2013 State Legislative Session, North Dakota will continue to support initiatives beneficial to the Bakken region and the state’s businesses.

Recently, the state’s tax department released tax revenue numbers that illustrate the impact of North Dakota’s growing oil industry. Oil tax revenue was reported on track to top $3.5 billion by the end of the 2013 fiscal year. This is a staggering $1.5 billion more than estimated by the 2011 state legislature. This revenue will help provide additional funding to counties impacted by oil development, as well as additional property tax relief and general fund dollars.

In addition, $1 billion in sales tax revenue was collected in the past fiscal year, nearly $365 million more than expected, and individual and corporate income tax revenue reached nearly $630 million, $300 million more than forecasted. While the state’s oil industry has played a significant role in the growth of this revenue, economic growth and impacts are strong statewide. North Dakota is proving to be a model for the rest of the nation. The state has created a tax, legal, and regulatory friendly environment, which has allowed the Bakken play to flourish, is attractive to new businesses and provides opportunities for existing companies to expand.

In 2012, the North Dakota Office of the Governor and the North Dakota Chamber of Commerce launched the 2020 & Beyond initiative, aimed at gathering input from the state’s business leaders, legislators and citizens to map out a 20-year development plan for the state. This will help ensure North Dakota continues to experience economic success and remains focused on creating and promoting programs and initiatives that foster additional business growth.

The future looks bright for not only North Dakota’s oil industry, but for businesses across the state. We invite you to join us in exploring the business opportunities available now and in the future in the Bakken region and across North Dakota.

Andy Peterson, president and CEO, North Dakota Chamber of Commerce

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